What is Mortgage Insurance?
Mortgage insurance, also known as mortgage life insurance or mortgage protection insurance, is a financial product used to protect your family and home.
Like all life insurance, mortgage life insurance is an agreement between you and a life insurance company. You agree to pay a predetermined rate. The life insurance company agrees to pay a sum of money to your beneficiaries if you die - as long as you were still paying your premiums at the time of your death.
This mortgage life insurance death benefit can then be used by your beneficiaries to pay off the mortgage on your home.
Mortgage life insurance is one of the easiest ways to provide for the financial well-being of your family.
Which Type of Mortgage Life Insurance Should I Get?
If you are only looking for mortgage protection, then term life insurance is the best type of mortgage life insurance to get. It is also the most common type of mortgage life insurance purchased.
Many financial service professionals would suggest that you look at your entire financial situation. Then you should buy a life insurance policy that will cover all of your needs, including mortgage protection insurance.
Should I buy from my Bank who holds the mortgage?
In most situations, this is not a good idea. There are many reasons why we say that.
- You are covered under a group policy owned by the bank. You have no control over it.
- The plan features and provisions are the same for every insured person. Only the face amount (mortgage amount) is different. Nothing can be added to it.
- The amount of insurance cannot be greater or lesser than the mortgage.
- The insurance is decreasing term. As the mortgage debt decreases, so does your insurance. The premiums, however, do not decrease.
- You cannot name a beneficiary for the simple reason the bank is the beneficiary.
- If you renegotiate your mortgage you have to reapply for mortgage insurance.
- The insurance is not convertible to any other plan.
- The bank owned coverage ends if:
- the mortgage loan is repaid.
- the mortgage is assumed by others.
- the house is sold.
- the insured person (mortgagee) no longer occupies the house I (e.g. it is rented).
- the mortgage goes into default.
- the bank’s group policy is discontinued.
What are the advantages of buying from a Life Insurance company?
- Premiums are usually less through a Life Insurance company.
- You determine the amount of coverage you want and need.
- If you die, your survivor gets the death benefit. The surviving spouse retains their own personal insurance coverage for as long as they choose.
- The insurance is level, so it never decreases. Should the one spouse die after the mortgage has decreased in size, the surviving spouse can pay off the mortgage and keep the balance of the insured sum for themselves.
- The insurance is convertible to a permanent plan.
- You control the policy. You name the beneficiary. The insurance is portable, so if you sell your present home you can use the policy for mortgage insurance on your new home.
- Superior insurance usually for less money.
Once you decide on the amount of life insurance you need simply enter the appropriate information in our online quote engine. The results are instantaneous. If you are happy with the price then give us a call and we’ll walk you through the underwriting process.
Still have questions? Need more help? Feel free to contact us at:
Gary White Insurance
Tel: (800) 433-5307 Bus. Cell: (416) 768-4279