SCHEME TO HELP MORTGAGORS

Hawke's Bay Herald-Tribune, Issue 59, 25 March 1937, Page 15

SCHEME TO HELP MORTGAGORS

-Press Asaoeiation.)

Insurance to Cover Unpaid Principal AVAILABIE ON DEATH

(By Telegraph-

WELLINGTON, Last Night. The Prime Minister stated to-day that a combined plan had been prepared by ttie State Advances Gorporation and the Government Life Insurance Department to enable mortgagors of the corporation to provide hy life insurance at Teasonable cost against the eontingency iof their failing to survive the date iwhen .the corporation's table moTtgage fwould be repaid. ; It is not unusual for a man of modjerate means to take out. a life insurance cover for the gpecific purpose Of jproviding in. the event of death sufficient f und* to liquidate his mortgage and leave an onencumbered home to his dependenta. Xt is recOgnised, however, that many married men, especially in the early twenties, who have small incomes and little capital resources, may find difficulty in paying the annual premium oi a full life policy of, say, £800, to £1000, in addition to meetmg the instalmenta on their mortgage and . other outgoings such aa rates, insurance and maintenancfi.. By limiting ,the insurance cover, how,evef, to the amount of the reducing ■baiance of the principal under the cor* jporation *s load it is possible to quote a jgreatly xeduced premium while still en.suring to the mortgagor's dependents a jmortgage-free home in the event of his premature death. A single premium. is payable at the commencement of the policy varying with the amount of the advance, age of mortgagor and term ot .loan. ! The applicant may if he desires pay ,the premium in cash, but in many cases ■this is not oonvenient and the coipora'tion, provided the proposal is .approved Iby the board of management and accept* ed by the Government Life Insurance Department, is prepared to increase the loan to cover the amount of the premium. The additional advance is then repaid to the corpora/tion by instalmenta as part of the loan moneys. The protection afforded by this type of policy is the clearance of the bal* anee of the Stato Advances Gorporation 's instalmeat mortgage in the event of the death of the astured, but it should be noted the cover exiends only to the baiance of the principal of ■ itho mortgage which has not fallen due .prior to the death of the assured mortgagor. All benefits under the policy; lapse on .the maturity date of ihemortgage. If the mortgagor who has taken out !* policy nnder this echeme ceases to (be the legal owner of the seourity or, !the whole or part of the principal is repaid "by arrangement with the &iate Advances Gorporation before it becomes idue in the terms of the loan, the proportionate part of single premium (cal.calculated on an actuarial basis) will be ••reGovered from the insurance office and icredited to the mortgagor 's aceount. iThe service is also ayailable in approved oases to persons whose properties ■are already mortgaged to the coiporation as well as to new applicants for loans. Provided the corporation'-s ;nsual margin of security is available a 'further advance wiU be granted in such cases to cover the amount of a single premium, a merely nominal charge being made for the preparation of the ■necessary documents. " Mortgage repayment insurance on sunilar linos has been widely taken up m England and to some extent also in Australia and New Zealand by insurance offices in eo-operation with various bidldxng societies. It is hoped the echeme now inaugurated by the State Advances Corporation and the Government Life Insurance Department will be a valuable adjunct to the coxporafinance ^ pr£>viding mortgage