There are many insurance policies that you should have, like term life, critical illness as well as comprehensive and collision for your car. There are however some insurance products that you might want to skip. The first policy in this series is mortgage life insurance.
Mortgage life insurance insures the remaining amount of your mortgage in the event of your death. While this insurance is very convenient to get, since the banks offer it when you sign your mortgage, you can likely get term life insurance for less money. Since mortgage insurance covers the mortgage, you’ll have to apply for new insurance if you move to another bank. This can be an issue if your health situation has changed since your last application. Term life is also a better option as it covers a set dollar amount, where mortgage life insurance is covering an ever-declining amount, your mortgage principle.
On top of all that, CBC’s Marketplace ran a story on people being denied their claim, accused of lying on their original application form.
Related Websites:
- The Basics of a Mortgage
- Comparing Life Insurance Policies
- Get Ready for a FHA Mortgage Insurance Premium Increase
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Great article!
Good one. Keep Posting!
Very practical entry you have here. I agree. With all sorts of insurance these days, there are some that you really can do without. I have to say that some insurance are just ridiculous and they just feed on people’s paranoia. I think the most necessary insurance are car insurance, home insurance and life insurance.
Do not buy mortgage insurance. The people who sell it are often not even trained in insurance and do not understand the actual policy. They are trained only how to sell it. Get an inexpensive term life insurance policy instead.
I am going to retire from my company and i have bought some mortgage policies for my future but some one called me and told me that company is going to change their policies and i will resubmit the policy papers and have to pay some extra charges for that, i am really worried about that what should i do? can you please suggest me anything?
When dealing with long term investment it is a good idea to have some sort of protection is something unfortunate was to happen and are not left out of pocket and in trouble. When my mom divorced my dad she carried on the mortgage but legally his name was still on it and they got insurance on the mortgage so if anyone died the mortgage will be paid off. Sadly my dad died 6 years ago and when a fiancé advisor asked mum about the mortgage when she was getting help found out there was some sort of life insurance on the mortgage and the house got paid off which was crazy news out of the blue.
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No kidding you can do without this. It reminds me of the gap auto insurance. Unnecessary when you can just increase your coverage with your current insurance company.
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Good points however sometimes people don’t qualify for term life insurance and mortgage life insurance is one of the only options to protect them.
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my parents had mortgage life insurance and when my dad passed away my mum only found out later that the mortgage could be paid off because of my dad’s passing which helped my mum a lot as the house is now hers.
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I’m 100% convinced now that term life insurance is better than mortgage life insurance. I would much rather have a specific dollar amount in my insurance than have it change every month as my principal payment decreases.