We were recently asked an important question about mortgage protection insurance from a local New Jersey resident. Her question is “what is mortgage protection insurance, or mortgage life insurance? Should I purchase it?” This is an important topic, here is my advice on this subject:
Mortgage protection insurance is a policy sold by your mortgage company that pays off your mortgage upon your death. The beneficiary of this type of policy is almost always the mortgage company. While Mortgage Life Insurance can be helpful in the right circumstance, there may be much better alternatives for you and your family.
Term life insurance is generally much more competitively priced than mortgage protection insurance and as the owner of the policy, you can pick the beneficiaries. This allows your family to use the proceeds of Life Insurance for whatever they deem necessary. This may be to pay off a mortgage, or they may decide it is more important to use the money for other household or medical expenses.
Mortgage protection insurance has other disadvantages, according to bankrate.com. The premium you pay is often lumped into the home loan, which means you are paying finance charges on the premium. A healthy nonsmoker can usually beat the price of mortgage life insurance by as much as 50 percent. Another disadvantage is the insurance stays with the house. In other words, it’s not transferable like regular life insurance.
Who might benefit from life insurance from the mortgage company? If you are obese, have high blood pressure, are a smoker, have diabetes, or have other health issues that keep you from getting preferred rates or in some cases keep you from getting life insurance at all, check out mortgage life insurance. It may be your only option.
Life Insurance is designed to minimize the financial impact of your death on your surviving loved ones who depend on your income (i.e., your spouse and kids). The Life Insurance professionals at LG Insurance Agency can work with you to determine the appropriate amount of life insurance coverage for your family and your budget. Call us for a free quote and consultation!
All content provided in this blog is for informational purposes only. Topics discussed on this blog relate to insurance products and issues in a general application, and are not an offer of insurance, a guarantee of coverage, or applicable to specific and individual circumstances. Contact LG Insurance Agency for questions and information specific to your insurance needs.
