INSURANCE COVER

Hawke's Bay Tribune, Volume XXVI, Issue 148, 8 June 1936, Page 9

INSURANCE COVER

State Advances Loan Security SCHEME EXPLAINED By Telegraph—Press Assn.— Copyright WELLINGTON June 7. An omcial explanation of the life-insurance provisions under the State Advances Corporation Bill, given on Saturday, made it clear that the policy which may be required to be effected is quite distinct from the ordinary life-insur-ance policy. “The State Advances Corporation may require that a mortgagor effect a life-insurance policy specially designed to cover the amount owing from time to time under the mortgage,” the official statement says. ‘‘All mortgages will be reducible by instalments that the insurance cover will be constantly reducing. The sum on a 20-year table £lOOO mortgage will bo reduced to, say, £7OO in 10 years, so that an insurance policy which covered a risk of £lOOO at the beginning of the mortgage will cover only £7OO after 10 years. At the end of the term, when the mortgage is paid off, the insurance policy lapses. “An ordinary life cover for £lOOO means that the assured person’s estate will receive £lOOO whether he dies one year or 20 years after the cover is effected. “The insurance cover required by the Bill is only for the amount actually owing under the mortgage from time to time. “The premium on a mortgage insurance policy is payable in one lump sum in advance, when the cover is effected and the policy can never lapse during the currency of the mortgage. The mortgagor may, if he desires, pay this premium in cash or ask the corporation to pay the insurance company and add to the loan. If ho adopts the latter course he repays the premium to the corporation by instalments during the term of the mortgage.

“The effect of the insurance cover is that, once a. married man has obtained a mortgage on a home on this plan, from the corporation, he knows that when he dies, whether after one year or 20 years, his wife and children will have a home completely free from mortgage.”