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Zurich Financial Services Australia has launched Home Loan Protection (HLP), a new insurance product that adjusts cover in line with a borrower’s outstanding mortgage balance.
The policy uses Open Banking technology to align insurance cover and premiums with the amount owed on a home loan. This means policyholders pay for cover that decreases as their mortgage reduces.
The product provides support in several circumstances. If a borrower is unable to work because of illness or injury, or if they lose employment through no fault of their own, HLP offers instalments to meet loan repayments or living expenses. In cases of death or terminal illness, a lump sum is paid that can be used to repay the home loan.
Zurich’s research found that while one in five Australians plan to buy a home, a similar proportion are concerned about losing their jobs. More than one in six worry about keeping up with mortgage payments.
Tim Kane, Zurich’s head of retail, said buying a home is a major milestone and protecting that investment is essential.
“HLP provides essential financial security for homeowners so they can focus on what matters most without the stress of getting by if their income is compromised,” he said.
Kane added that the use of data and technology enables a tailored solution that changes with the borrower’s needs.
“Importantly, as a customer pays off their loan, the level of cover and monthly premium will automatically adjust with it. This unique feature demonstrates the power of utilising data and technology to ensure customers receive a tailored solution that meets their needs,” Kane said.
HLP is available for direct purchase through Zurich’s website once a home loan has been approved.
The cover provides for loan balances of up to $1 million. Under the life-only option, a lump sum of up to $1 million is paid if the policyholder dies or is diagnosed with a terminal illness with less than 12 months to live. Illness, injury and involuntary unemployment cover pays minimum loan repayments up to $10,000 per month for up to 18 months in the case of illness or injury, and up to 90 days for unemployment.
Customers can choose between life-only, income security (illness, injury and unemployment), or full protection combining all benefits. Applicants must be between 18 and 59 years old, hold a home loan between $30,000 and $1 million, and be Australian or New Zealand citizens or permanent residents.
Policies end when the home loan is fully repaid or refinanced under a new loan number. Zurich also offers a 30-day cooling-off period during which premiums can be refunded if no claim has been made.
