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I recently discovered by accident that my Mortgage Protection Insurance for my Strata Unit was only available as an add-on to Contents Insurance. This requisite had been insituted at some unknown time. I had been paying this insurance for more than two decades, since the time when the MPI was a stand-alone policy. I was never told that the Terms and Conditions had changed. My Lender did not seem to care that my insurance policy would never have paid out. In fact, it was my Lender who set it up, and my Lender and the Insurer who failed to tell me of any changes. I took out my Mortgage Loan under the HomeFund Scheme, and this insurance was set up as a protection for the Lender on a loan which was likely to balloon in size past the value of the property.
Interesting that my Lender has apparently not bothered to tell any other of the Homefund Lenders that their insurance may be invalid. The Insurance has to be a separate policy, with the name of the Mortgagee on it, and it relates only to Strata Schemes, as a borrower cannot take out a policy with the name of the Mortgagee if the insurance relates to the entire block.
So if you have a HomeFund Loan, or you have taken out Mortgage Protection Insurance on your Strata Unit, check that you do not need to have Contents Insurance as a prerequisite. You may be paying money on a policy which can never pay out.
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