If you have a mortgage you will have been asked by your lender to insure it with mortgage life insurance. While it isn’t a requirement to get the mortgage, the majority of lenders feel it is required or it makes good financial sense.
Just a few questions later and you are covered, secure in knowing that if you die your family won’t have a mortgage to pay anymore….
Insuring your mortgage does make good financial sense, however your family should be the beneficiary of an insurance policy not the lender. What if the need is greater than the mortgage? Can the surviving family pay for the upkeep and the utilities?
A few questions for mortgage insurance seems easy, why go through the hassle of purchasing life insurance through a qualified life insurance company? The simple answer is: do you want the life insurance company to determine before you start paying for the coverage if you qualify or would you like the mortgage company to decide when you die if you qualified?
Mortgage life insurance policies use post-claims underwriting, where they determine at death if your mortgage will get paid off.
Life insurance typically has a lower premium cost and your amount of insurance remains level for the term you pick, not what your remaining mortgage balance is.
Take a look at this comparison: 40 year old male and 40 year old female (standard non-smokers) with a $300,000 mortgage amortized over 20 years:
Life Insurance |
Mortgage Insurance |
||
| Year 1 | $58/month for $300,000 | Year 1 | $95/month for $300,000 |
| Year 10 | $58/month for $300,000 | Year 10 | $115/month for $175,000 |
| Year 15 | $58/month for $300,000 | Year 15 |
$77/month for $95,000 |
