The Commonwealth Bank of Australia (CBA) has revealed that it will introduce a “complimentary” insurance feature, called Home Loan Compassionate Care, providing a basic level of cover of up to 12 months of mortgage repayments should owner-occupier borrower, or their spouse or dependants, fall terminally ill or die.
According to CBA group executive of retail banking services Angus Sullivan, the insurance cover will be available to existing and future owner-occupier borrowers from early 2020.
“Paying off a mortgage is a long-term commitment, and when a family goes through the hardship of terminal illness or the loss of a loved one, they should not have to worry about their family home,” Mr Sullivan said.
“Customers will also be able to purchase additional cover, at their discretion, based on their needs from a range of new products and features that will soon be launched.”
Home Loan Compassionate Care is reportedly part of a range of new propositions being made to meet the insurance needs of CBA’s mortgage customers.
“This range of products will reflect improvements we are making to our design and sales processes, in line with recommendations from ASIC and the industry, to help improve customer outcomes,” Mr Sullivan said.
Under the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2019, which passed Parliament in April, product providers are obligated to specify the target market for each of their products, ensuring that the design of the products are consistent with the likely objectives, financial situation and needs of customers within that target market.
The Australian Prudential Regulation Authority also last month issued a letter to authorised deposit-taking institutions – in response to the banking royal commission’s recommendation 1.17 – proposing that they identify and register an accountable person, excluding CEOs, to hold “end-to-end product responsibility” for every product that the ADI and its subsidiaries offer to customers.
Commonwealth Bank said that it plans to work with AIA Group to develop new insurance products following the divestment of CommInsure in Australia. The divestment of CommInsure to AIA is still pending regulatory approvals.
A spokesperson from ANZ said the big four bank does not currently offer a similar product, but the bank is “continually assessing ways to improve our offering to customers”. The spokesperson also noted that ANZ has only recently completed the sale of its life insurance business to Zurich.
Mortgage Business has reached out to other major banks about their plans on providing similar cover.
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Tas Bindi is the features editor on the mortgage titles and writes about the mortgage industry, macroeconomics, fintech, financial regulation, and market trends.
Prior to joining Momentum Media, Tas wrote for business and technology titles such as ZDNet, TechRepublic, Startup Daily, and Dynamic Business.