Buying a house is a big investment, and buyers are finding that life insurance is a more flexible and less expensive alternative to the mortgage life insurance they buy from the bank. This is another reason why life insurance is an important part of a good financial plan.
Why is Mortgage Life Insurance a Bad Idea?
When people talk to banks about getting a home loan, they are asked if they want their house to be paid off if they die. Who could possibly say no to that? People don't look at their other options or shop around for better rates, which is a shame.
When you buy mortgage insurance through a bank, the coverage goes down as the mortgage goes down, but the premiums don't change. This means that as you pay down your mortgage, the cost of the coverage goes up. Also, even though mortgage life insurance pays off the balance of the loan, only the bank gets the money. You get the house but not any money.
Life insurance saves the day!
Life insurance can help pay off that debt and add cash value to your estate so that your beneficiaries will get more money. When you own your own life insurance, you have these choices:
You don't have to requalify for coverage if you buy a new home or switch mortgage companies during the term of your policy.
Changeable and able to be renewed. A life insurance policy that is renewable and convertible can be changed at any time into a permanent product without a medical exam. If, on the other hand, your mortgage life contract with a bank runs out, you will be older and may have to pay more for term life insurance.
Choices About Life Insurance
When you are comparing group mortgage life insurance from a bank and life insurance that's personally owned, you'll see that it is cheaper to have your own life insurance.
