What is bond insurance and why do you need it?

For most South Africans, the purchase of a home is the single largest investment they will ever make during the course of their lives. The dream of owning a home is as strong as it has ever been, but that dream is only as stable as the mechanisms you put into place to protect it. The loss of a job or a bout with a major illness can wreak havoc on your ability to make your bond payments, placing your solvency and your home at risk. To protect against those types of events and the damage that they can do to your life and financial stability, you should consider obtaining bond insurance to protect your investment.

Defining bond insurance

Bond insurance is a type of insurance designed to enable you to avoid missing mortgage payments due to unexpected sickness, injury, and loss of employment. Think of it as being similar to life insurance, but for your home. In the event that you died and had life insurance to provide for your burial, as well as survivors’ benefits, you could enjoy the peace of mind that comes from knowing your family will be taken care of when you pass from life. In the case of bond insurance, your family home is protected when you need it the most – since bond insurance is designed to provide for a continuation of bond payments when disaster strikes, and to ensure that your home is not lost.

Why you need it

Like any insurance, there are arguments in favor of maintaining bond insurance and arguments against. Those who disavow insurance of any kind would argue that there are enough things to worry about in this life on a day to day basis to render any planning for future mishaps too expensive. Besides, they would say, the chance that you will ever need insurance is so remote that you should only worry about it if you have extra money to invest. They consider insurance a luxury.

To the proponent of bond insurance, however, the larger picture takes precedence. Yes, insurance is something that you hope you never have to use. Life would be just fine if no major disasters ever struck, and in such a situation bond insurance would be unnecessary. In the real world, however, disasters do strike. And though the worst kind of disabling disasters may be rare, they are so profoundly felt when they do occur that it is a worthwhile endeavor to protect your family and your assets against their eventuality. Bond insurance is one of the best ways to provide a bulwark against any negative change of circumstances that could affect your ability to retain your home.

If you are a homeowner or thinking about becoming one, you should learn more about bond insurance opportunities to ensure that you are providing the maximum protection for your life’s greatest investment. Nobody likes to think about the possibility of something dreadful happening in the future, but the fact is that bad things do occur. If they should happen to you, you’ll be glad you took the time to investigate sound protection with bond insurance.