Is mortgage life insurance your best choice?
You’re completing mortgage papers or renewing your mortgage with your bank or other lending institution. The mortgage representative offers you life insurance on the mortgage. Should you say yes?
It depends. Mortgage life insurance pays off the mortgage in the event of your death, enabling your family to keep the home, mortgage-free. But there’s another way to protect your family that you might prefer. Here’s why.You don’t control the policy. When you purchase mortgage life insurance from your lender, you do not own the mortgage life insurance policy and you don’t get to name the beneficiary – in fact, the beneficiary is the financial institution.
The death benefit decreases. The death benefit gets smaller with each mortgage payment you make. Your insurance premium, however, stays the same.
Coverage ends if you switch lenders. If you renew your mortgage with a different bank, you’ll need to go through the insurance application process again.
An alternative is simply to purchase personal life insurance through an independent life agent and choose an amount that covers your mortgage. This approach offers a number of benefits:
- You, not the bank, own the policy.
- You can name whomever you like as beneficiary.
- The death benefit does not decrease.
- Coverage stays with you, no matter where your mortgage is.
Talk to us. We’ll look at your unique needs and help you find the best coverage for you and your family.