The Commonwealth Bank of Australia (CBA) has officially launched “Home Loan Compassionate Care”, an initiative that will provide complimentary protection to owner-occupiers by covering their mortgage repayments for 12 months if they, their spouse or dependant passes away or is diagnosed with a terminal illness.
The initiative, which is only available for owner-occupiers aged 18 to 59, was first announced earlier this month following the release of CBA’s half-year results for the 2020 financial year (HY20).
CBA CEO Matt Comyn told Mortgage Business that the offering was developed as part of the bank’s long-term partnership with insurer AIA.
“We took the opportunity to develop what we believe is a market-leading product,” he said.
“I’ve personally dealt with a number of [customers] who I think would personally benefit from a product such as this.”
CBA noted that the initiative comes in light of its own research finding that a third of Australians would only be able to cover their home loan repayments for up to six months if they, their spouse or dependant passed away or was diagnosed with a terminal illness, with one in 10 home owners only able to cover mortgage repayments for one month or less.
Following the official launch of the offering, Angus Sullivan, CBA’s group executive, retail banking services, said: “We know that mortgage repayments are the single biggest financial commitment for Australian home owners, so when the unthinkable happens we’ll support our customers by making their home loan repayments for around 12 months at no cost.
“We’re proud that together with AIA we have been able to deliver this Australian-first for new home loan customers and will be making it available to our existing customers at no cost to thank them for their loyalty.”
CBA’s research also revealed that over half of Australian home owners have not spoken with their spouse or dependants about how they would meet ongoing repayments in the event of a death of serious illness.
While nearly half of respondents said they manage the monthly repayments, a third said they’re not fully aware of the details relating to their home loan.
Moreover, the research found that nearly half (45 per cent) of total respondents, and 55 per cent of those with children under the age of 18, would require financial assistance to cover mortgage repayments. Mortgage-holders under the age of 35 were most likely to require support (67 per cent).
Two-fifths of respondents who said they would require financial assistance said they would call on support from family or friends to cover ongoing mortgage repayments.
Mr Sullivan noted that CBA’s initiative would not require distressed customers to apply for the assistance.
“If something were to happen, the last thing you should have to worry about is your home loan,” he said.
“In designing this protection, we’ve made sure there’s no need to sign up or to activate it. We’ve also consulted with our own employees who have gone through similar, difficult experiences to ensure the end-to-end claims process is as easy and stress-free as possible, and a dedicated team has undergone specialised training to handle these sensitive matters.”