Hello JN Members,
Welcome to part two of Understanding Your Credit Facility Agreement.
In this series, our aim is to assist you to understand what a credit facility agreement is, and break down the different credit products offered by JN Bank, and how they work.
Last month, we discussed your mortgage contract. Today, we will be discussing peril and life insurance as it relates to your mortgage.
Peril Insurance
Your property (except for strata properties i.e. apartments, strata townhouses) should be comprehensively insured for the full replacement value. In the case of strata properties (i.e. apartments, strata townhouses), contingency insurance coverage is applicable, which covers the full loan amount. Comprehensive peril insurance coverage on the apartment complex is the responsibility of the Strata Management body. In the event of a total loss, the contingency insurance coverage will settle the Bank’s loan. Kindly note however, that the comprehensive peril insurance coverage commissioned by your Strata Management body covers the replacement of the building.
Peril Insurance is mandatory for all properties with buildings, where the loan amount exceeds the value of the land. It is advisable to review the insurance coverage on your property annually for adequacy. If your property is insured through JN General Insurance Co. Ltd., your coverage is increased by 4% annually to ensure adequate coverage is in place.
Peril insurance coverage can be obtained from any insurance company on our Panel of Insurance Carriers. Insurance premiums, however, are collected via your monthly payment and are administered through the Bank. An advance of the first year’s premium, amortized over the life of the loan, may be obtained.
Life Insurance
Mortgage Life Insurance is optional; however, the Bank at its discretion, may insure the life/lives of the borrower(s) and guarantor(s). This insurance covers the loan amount and is limited to three (3) persons per loan. Acceptance of the risk rests with the insurance company. Premiums are included as part of your monthly mortgage payment. In the event of death of an insured, the insurance coverage will settle the outstanding principal balance, as at the date of death.
Persons who are age 64 years or older are not eligible to apply for coverage. For insured persons on existing mortgages, coverage expires at age 70 or upon closure of the mortgage, whichever occurs first.
Property Taxes
Payment of these taxes is the responsibility of the mortgagor(s).
In February’s newsletter, we will continue the focus on your mortgage contract, as we discuss Redemption of Mortgage.
Click here to read – Understanding Your Credit Facility Agreement- Part 1
