Life Insurance for Your Mortgage
When you get a mortgage from a lender, they will typically ask you if you want to mortgage life insurance protection. That is, if death of the insured person occurs then the policy will pay off the balance of the mortgage. Sounds pretty good?
Why You Should Not Buy Mortgage Life Insurance From Your Bank
If you think about it, when a lender asks you if you want to buy mortgage insurance, they are asking if you would like to pay a monthly premium to protect them, not you. On death, the entire benefit proceeds get paid directly to the lender and not a penny is leftover for your family. As your mortgage gets paid down over time, the premium stays the same, but the policy will never pay more than the mortgage balance.
Contrast this to a personal life insurance policy. The death benefit is paid to your beneficiary, not the lender, and the amount does not decrease as the mortgage balance is paid down. Your beneficiary can then decide whether to pay off the entire mortgage, part of the mortgage, or simply continue the monthly payments while using the balance of the proceeds to cover other expenses.
Some mortgage life insurance policies have other drawbacks as well, such as higher cost than their personal life insurance policy counterpart, and post-claim underwriting. Post-claim underwriting is where the determination of whether you qualify for the policy is done at the time of the death claim instead of when you apply.
Expert Mortgage Life Insurance Experts
Contact us at Venture First Advisory and we’ll help you get the mortgage life insurance that best suits you and your family’s needs. We’re the experts in helping you get the best insurance policy for with your best interests in mind.