RetireJapan

This came up in other threads so I wanted to put the information together.

What are peoples thoughts on the additional health cover for mortgage applications. Part of me thinks it's like buying an extended warranty on a computer and therefore a terrible idea. At the same time, a mortgage is for ~30 years and our chances of getting one of these diseases will grow significantly as we age.

Who's got it? Who wants it? Who wishes they didn't take it but are stuck with it?

I got cancer+ for free for being (just) under 40, so of course I said yes

I got the additional mortgage health insurance as a percentage of the interest. However, it would only cover until I had recovered from these illnesses. I was reading in the other post that it would pay off their mortgage if they got any of these illnesses, I thought that was a bit too good to be true. Although I may be wrong...

Personally, I didn't bother. Banks love this kind of insurance because these kind of health problems are more common in late middle or old age, by which time most of your loan will have already been paid off. Depending on the size of your loan, the extra interest will probably end up costing a couple of million yen in total. Also, it's worth paying attention to exactly what is covered. Sometimes the criteria are quite strict and the policy may not pay out even if you are unable to work. In addition, if you've already got life insurance then you might be covered anyway.

On the other hand, if you do fall ill it could be a lifesaver.

Some of the pros and cons are here .

Prominent in my bank's marketing material is the statistic that 1 in 2 Japanese people get cancer at some point in their lives. I asked the guy straight up how, with those odds, how are they not losing money on this? He explained that while the 50% stat is not untrue, the vast majority of those are diagnosed later in life, at an age when the mortgage product will already have been paid off, or the remaining balance is very low. So they're not losing money.

While such diseases are inherently unpredictable, one thing that you can look at is your family history. In my case, a grandfather and my mother have both had cancer. That's 2 out of 6 of the previous two generations, so while maybe not super high, I figured my odds would be slightly higher than the average joe, and thus worth the protection.

Not sure I agree with the "extended warranty" analogy though. I see what you're trying to say, but paying extra for a paltry $1,000-2,000 protection, versus the amounts involved in a mortgage, put those two in a completely different ballpark for me. Not to mention the 30+ years.

fools_gold wrote: ↑Thu Aug 26, 2021 3:28 pm
Some of the pros and cons are here .

Nice article, thank you