Fire, Home Content and Mortgage Insurance


When a customer took up a home loan from a bank, he will be entitled to first year free fire insurance. For this free fire insurance, what does it cover?

 Generally, it only covers the structure of the property.This means that if your property structure is severely damaged (non liveable condition) then you are able to claim up to the current valuation of the property.The claim rate for this kind of insurance is extremely low as Singapore is a very safe country with no natural disaster or terror attack that will eventually destroy the entire structure. Take note that some fire insurance exclude natural disaster claim.

 Some banks are being more generous. Besides the fire insurance, they also provide home content insurance for their customers.

 Home content insurance will pay for the damage or loss of customers' possessions located within the house. Usually the coverage for home content insurance is from $5,000 to $10,000

 Mortgage insurance covers the life of the insured. Should the insured suffer from death or total disabilities, the outstanding home loan will be fully paid off by the insurance company. If the home loan is taken by two persons, mortgage insurance allows coverage of both applicants.

 Advantage of Mortgage Insurance
  • Affordable premiums for the coverage of both life (generally the premium is more affordable compared to term or life insurance).
  • If death occurs to either insured, the payout (outstanding loan amount) will be paid to the joint insured (he/she can choose to keep or pay off the outstanding home loan).
  • This insurance coverage is portable - this means if you ever do a refinancing to another bank, the coverage will not be affected.
  • Flexibility to terminate anytime.
  • Usually the last few years of the premium is free.
Disadvantage of Mortgage Insurance
  • Reducing coverage - as the objective of the mortgage insurance is to cover the outstanding home loan, the coverage is on a reducing term.
  • Only one claim - should both insured suffer from death, only one claim of the total outstanding loan is allowed.
  • No cash value - the insured is mainly paying for the protection. At the end of the policy, the insured does not get back any cash from the insurance company.

Jonathan Chua Yu-Ming
Financial Services Consultant
Authorized representative of
AIA Singapore (Reg. No. 201106386R)
SP-HO (TANGIMCHEONG District)
AIA Tampines
3 Tampines Grande
#04-01
Singapore 528799
T: (65) 63496986
M: (65) 9727 7414
E: jonathanchua@aia.com.sg
RNF Reg No.: JCY300092300
AIA.COM.SG

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