STATE ADVANCES.

Auckland Star, Volume LXVII, Issue 134, 8 June 1936, Page 10

STATE ADVANCES.

INSURANCE SCHEME.

PERIOD OF TWENTY YEARS. requirements explained. (By Telegraph.— Parliamentary Reporter.) WELLINGTON, Saturday. Insurance proposals under the State Advances Corporation Bill were emphasised by the Hon. M. Fagan when the bill was in the Legislative Counci . Mr. Fagan said that on a loan of £1000 cover could be taken which would provide that if death occurred during a term of 20 years insurance policy moneys would pay off the balance remaining under the mortgage. e mortgage was a table mortgage. The premium on £1000 for 20 years was £45. That premium was added to the mortgage, making a total of £104.3, an that would cost £3 G/8 per year.

In elaboration of Mr. Fagan's remarks it is stated officially that the State Advances Corporation may require that a mortgagor should effect a life insurance policy specially designed to cover the amount from time to time remaining owing under the mortgage. All mortgages will be reducible by instalments. That insurance cover will be for a constantly reducing sum. On a 20year table, a £1000 mortgage would be reduced to say, £700 in ten years, so that the insurance policy which covered the risk of £1000 at the beginning of the mortgage would cover only £700 after a period of ten years.

At the end of the term when the mortgage was paid off the insurance policy would lapse. The policy was therefore quite distinct from an ordinary life insurance policy. An ordinary life cover for f 1000 meant that assured's estate would receive £1000, whether he died one year or 20 years after the cover was effected. The insurance cover required by Section 33 of the bill was only for tiie amount that was actually owing under the mortgage from time to time. The premium on a mortgage insurance policy will be payable in one lump sum in advance when cover is effected, and the policy can never lapse during the currency of the mortgage. A mortgagor may, if he desires, pay this premium in cash or ask the State Advances Corporation to pay it to the insurance company, and add it to the loan. If lie adds it to the loan he will repay the premium to the corporation by instalments during the term of the mortgage. Figures quoted by Mr. Fagan apply to a case of this kind. Where a loan of £1000 is granted to a man aged 30 years the effect of the insurance cover is that once a married man has obtained a mortgage on his home on this plan from the .State Advances Corporation he will know that when he dies, whether within one year or 20, his wife and children will have the home completely free of mortgage.