What is BMI?

BMI is a general insurance policy that puts the borrower first. The borrower is the sole insured party under the policy not the lender. The lender is named as an interested party in the policy, so their practical interest is met through the borrower's own claim and payment direction, not through a separate policy interest of the lender's own.

Unlike traditional LMI, where the lender is the insured and the only party who can claim, BMI pays benefits to, or for the account of, the borrower including a shortfall benefit that the borrower directs toward paying out their loan.

BMI provides:

• Shortfall Protection; if a shortfall event occurs following default, BMI indemnifies the borrower for the shortfall amount, applied to the loan at the borrower's direction, with no right of recovery against the borrower except in cases of fraud or intentional misrepresentation.

• Repayment Assistance (Unemployment); up to $5,000 per month for up to 6 months, after a 30-day waiting period, if the borrower suffers an eligible involuntary unemployment event.

• Repayment Assistance (Health/Incapacity); the same benefit structure, for eligible illness or injury events.

• LMHI (Lenders Monitored Home Insurance); an optional bundled add-on providing real-time monitoring of the borrower's home insurance currency for the lender.

BMI is not a guarantee, surety, credit enhancement, or loan repayment undertaking in favour of the lender. It operates alongside, not in place of, statutory hardship arrangements under the National Consumer Credit Protection Act 2010, and is issued as a contract of general insurance under the Insurance Act 1973 (Cth), with premiums actuarially certified under APRA Prudential Standard GPS 320.

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Available to SMSF trustees in connection with a Limited Recourse Borrowing Arrangement (LRBA) premiums can be paid from the trustee's superannuation account.