Category Archives: Insurance

Do I Need To Buy Mortgage Life Insurance?

Mortgage life insurance is a policy that pays off your mortgage at the time of your death. This is not to be confused with private mortgage insurance (PMI) which only benefits the lender in the event you are unable to pay your mortgage.

The beneficiary on a mortgage life insurance policy is the lender. The money goes directly to them.

You might be okay with that, but in a lot of circumstances, it makes more sense to have a traditional life insurance policy and for the money to go to your dependents, allowing them to decide whether or not to pay off the mortgage, continue making mortgage payments, or to sell the house. They may have more urgent needs than just paying off the home.

When you shop for mortgage life insurance rates, you will find that term life insurance is usually more competitively priced. Term life insurance will also allow you to name your children and/or spouse as beneficiaries rather than the mortgage lender.

Another disadvantage to mortgage life insurance to consider is that the policy stays with the house. That is, if you decide to move, the policy is not transferable to your new home. You would have to requalify for a new policy. You are now a few years older, so likely will pay more for the new policy.

So should anyone buy mortgage life insurance? In some cases, yes. If you are obese, smoke, have high blood pressure, have diabetes, or have other health issues that keep you from getting the best rates on traditional life insurance, or even maybe keep you from getting life insurance at all, mortgage life insurance might be your only option. These policies typically have much less stringent health requirements for qualification.

Generally speaking, buying any kind of life insurance that has one purpose is usually not a good idea. Most of the time you are far better off sitting down with a financial advisor. They can help you to determine the needs your family would have in the event of your demise, and help you to purchase the appropriate amount of coverage to meet those needs.

Do I Need To Buy Mortgage Life Insurance?

Mortgage life insurance is a policy that pays off your mortgage at the time of your death. This is not to be confused with private mortgage insurance (PMI) which only benefits the lender in the event you are unable to pay your mortgage.

The beneficiary on a mortgage life insurance policy is the lender. The money goes directly to them.

You might be okay with that, but in a lot of circumstances, it makes more sense to have a traditional life insurance policy and for the money to go to your dependents, allowing them to decide whether or not to pay off the mortgage, continue making mortgage payments, or to sell the house. They may have more urgent needs than just paying off the home.

Term life insurance is usually more competitively priced and will allow you to name your children and/or spouse as beneficiaries rather than the mortgage lender.

Another disadvantage to mortgage life insurance to consider is that the policy stays with the house. That is, if you decide to move, the policy is not transferable to your new home. You would have to requalify for a new policy. You are now a few years older, so likely will pay more for the new policy.

So should anyone buy mortgage life insurance? In some cases, yes. If you are obese, smoke, have high blood pressure, have diabetes, or have other health issues that keep you from getting the best rates on traditional life insurance, or even maybe keep you from getting life insurance at all, mortgage life insurance might be your only option. These policies typically have much less stringent health requirements for qualification.

Generally speaking, buying any kind of life insurance that has one purpose is usually not a good idea. Most of the time you are far better off sitting down with a financial advisor. They can help you to determine the needs your family would have in the event of your demise, and help you to purchase the appropriate amount of coverage to meet those needs.