Mortgage Insurance
Protect your home and your family – not the lender
Most lending institutions offer you insurance when you apply for a mortgage, personal loan, or line of credit.
This type of insurance is most commonly known as “mortgage insurance.”
Mortgage insurance is actually group term insurance that is used to pay off a large debt in the event of a group member’s death.
Members of the group pay the same premium regardless of individual risk. Good news if you’re a smoker. Bad news if you’re not.
Mortgage insurance isn’t portable. This means that coverage ends if your mortgage is terminated, you sell your house, or you transfer your mortgage. So it’s not very advantageous at all if you need insurance in the future and have become uninsurable.
In the event of your death, the insurance benefit is paid directly to the lending institution. You have no choice on how the death benefit is used. Maybe it’s better to pay off other debt, keep the mortgage and use the death benefit in a different manner, or pay for your final expenses? But with mortgage insurance the payment is made directly to the institution.
In addition, the monthly premium paid doesn’t decline over time. Even when the balance of your mortgage is diminishing and in turn your insurance coverage is decreasing, you’re still paying the same amount. In essence, the same monthly payment is used to pay for insurance that eventually declines to zero.
Buying mortgage insurance on a group basis may not be in your best interests.
Life Insurance
Instead of purchasing your insurance through your lender, you can purchase it through a qualified insurance broker. An insurance broker can compare the rates of many different personal insurance providers in order to find the absolute best coverage for you.
A personal insurance policy covers you – not your lender. You can select the plan that meets your needs. Term life insurance policies may be convertible and renewable: if your health changes and you find it difficult to get life insurance, you can keep the full coverage amount and convert the insurance to any permanent plan – without having to re-qualify medically.
A personal insurance policy’s coverage does not decline over time. Even if your mortgage is paid off you will still be covered for the agreed upon amount at application.
If you move, or find a better mortgage provider, you won’t have to re-apply or switch your mortgage insurance. You own your policy – not the lender.
Unlike mortgage insurance, you can appoint your own beneficiaries and decide how they receive the inheritance when you pass. You could stipulate that it is used to pay the mortgage, or that it is to provide an income for a surviving spouse or children, or that it could be used for your children’s education. The choice is ultimately yours.
You get to choose the type of insurance that best suits your needs and your budget.
For more information give us a call @ 250 953 6816