Earlier this week, Commonwealth Bank announced a new initiative that will cover 12 months of mortgage repayment costs for home loan customers dealing with serious illness or death in the family; while the gesture has been generally applauded, some have questioned the true scope of the support it provides.
ALI Group, a loan and mortgage insurance provider, welcomed CBA’s Home Loan Compassionate Care as being “very positive” in terms of raising awareness of the risk of being rendered unable to make loan repayments for unforeseen reasons, especially given that the major bank is Australia’s leading home loan provider; however, the group has also drawn attention to the “very limited” scope of the scheme, given its one-year duration.
“Most of our mortgage protection claims arise as a result of critical illness, where the claimant recovers but at a great financial cost, which includes but is not limited to expensive treatment, medicines, surgeries, travel costs, loss of income and other living expenses," explained Huy Truong, ALI Group CEO.
“The good news is, with advancements in medical research, survival rates are increasing for Australians impacted by a cancer, heart attacks, strokes and other serious illnesses.
“The bad news is the out-of-pocket costs and long-term expenses which come with a serious illness like cancer.”
According to ALI Group, an Australian male between the age of 25 and 34 years old who is diagnosed with prostate cancer can expect to pay over $36,800 himself and may need over 48 days off work for recovery.
“It is in view of these realities, we ask for Australians to consider how they would manage financially,” said Truong.
“Despite the limitations of Compassionate Care, we applaud CBA for putting this very important issue on the table.
“Compassionate Care will now ensure every mortgage broker in Australia who is offering an eligible CBA home loan, will discuss servicing a mortgage in the face of financial hardship brought about by serious medical events and highlight these risks to Australian home and property buyers.”