One of the biggest mistakes that many new homeowners make is taking a mortgage life insurance policy. It’s not that it’s a bad idea in theory, it’s just that there are better ways to provide insurance for your family, including an allowance for paying off your mortgage. In most cases, this can be better accomplished with a simple term life insurance policy. What Is Mortgage Life Insurance A mortgage life insurance policy is exactly what the name implies. It’s a life insurance policy that is specifically tied to payoff of your mortgage. You can think of it as the biggest example of credit life insurance. As an example, let’s say that you take a $200,000 mortgage on your house. In order to...
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In 1998 my mother took out a mortgage with Nationwide and at the same time purchased an insurance policy to ensure she was covered in the event that she died before the mortgage was paid off. In 2004, she paid off the mortgage. She asked at the time about the mortgage insurance, assuming this would cease. However, she was told by an adviser at Nationwide that she could "use this as life insurance". Subsequently, Legal & General took over Nationwide's policies in this area. In 2012, my mother received a letter from L&G informing her she was paying a "mortgage reducing policy". On further investigation she was told this would only pay out if she had a mortgage – which she had not had...
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And we’ll make sure you don’t pay over the odds in the process Many of us scrimp and save and work like heck to own a property. Once we’ve done so it’s usually not just our most valuable asset, but keeps rising in value, and we want it to benefit those closest to us. If you can relate to that – and we wager you probably can – and you have a mortgage, there is one kind of insurance you really need. It is mortgage life insurance, often called Mortgage Protection. It pays out if you die before you’ve paid off your mortgage. And what a tragedy if those you love don’t in the end benefit from your efforts and forethought! But, as with everything else in life – especially when money is involved –...
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Why You Should Have Life Insurance When You Get a Mortgage Getting a mortgage is a huge financial undertaking – for most people the largest monetary commitment they will ever make. Making sure your family is protected if anything happens to you is an important thing to think about. Do you need life insurance when getting a mortgage? Legally, it isn’t compulsory to take out life insurance with a mortgage, but that doesn’t stop it from being a very sensible option to take! A mortgage is a very long-term loan. For most people, a 25-year or greater period of repayments will be set out and a lot can happen in those twenty-five years. Life insurance that is correctly set-up to...
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Term Life Insurance vs. Mortgage Protection Insurance When it comes to insuring your home and your mortgage against your untimely death, it may seem like there is not too great of a difference between term life insurance and mortgage protection insurance. While on some level that may be true, one of the best parts about MPI, or mortgage protection insurance over term life insurance is that it allows for some pretty cool policy riders that can be added on to provide living benefits as well. Let’s take a look at some of those policy options available to people who take advantage of a mortgage protection insurance program offering, as well as what makes an MPI a unique type of insurance plan....
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Disability insurance should be a vital component in your financial plan, especially if you have children or other dependents counting on you for support. But this may be hard to do if you have preexisting medical conditions such as diabetes, cancer or musculoskeletal disorders. Many disability insurance companies will exclude those and other conditions from coverage if you already have them when you apply, or else the coverage may be prohibitively expensive. And the disturbing fact is, almost half of all foreclosures stem from medical or disability issues where there was no insurance protection. But mortgage disability insurance should not be confused with private mortgage insurance, which...
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Some Facts You Need to Know About Mortgage Life Insurance Before you take on a mortgage life insurance policy, it is best that you know the details and facts related to the policy. This way, you know what to expect from your coverage. When also make an application, you will also have to look at your options, so it will be helpful to know some key facts regarding a mortgage life insurance product. Repayment Mortgage or Interest Only Mortgage? You will need a different kind of coverage for different kinds of mortgages. Repayment mortgage. If you have a repayment mortgage, your monthly payments go towards decreasing the loan, as well as the interest on the loan. The mortgage life insurance...
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Mortgage life insurance is designed to pay off the rest of your mortgage in the event that you or your spouse die with money still owing on your home. It sounds like a no-brainer, but in most cases, it turns out not to be such a great deal. “It sounds enticing, but do not let your lender trick you into purchasing such a policy,” says Dale Robyn Siegel, author of The New Rules for Mortgages. She says that instead you should call your life insurance company and ask how much it would cost to provide additional life or term life insurance coverage for the full mortgage amount. “That would be whole lot cheaper.” The problem with mortgage life insurance is that it’s non-transferrable, so premiums...
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A potential “helping hand” for a homeowner’s heirs. No one wants to saddle their heirs with the hard choice of paying off an unsettled mortgage or selling or losing a home. A mortgage term life insurance policy can provide relief in such a dilemma. Simply put, this is a term life policy designed for homeowners. If you die owing a huge sum to a mortgage lender, the proceeds from the policy will pay off the note. Why, and why not? The pros and cons of mortgage term life are simply stated. On the plus side, you are paying (relatively) little for a lot of potential mortgage protection, which could be useful if your heirs are in no financial shape to make mortgage payments. On the negative side...
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