People talk about the importance of life insurance all the time and if there is one thing that we noticed; it is that people just seem to be avoiding mortgage life insurance.
The term sounds a bit fancy; don’t you think? So why are people avoiding it? In this article, we are going to discuss what mortgage life insurance is and why you should stay away from it as much as possible.
What Is Mortgage Insurance?
It is a kind of life insurance that pays off whatever mortgage loan you have left at the moment of your death. You can choose a term between 15 and 30 years.
It might sound pretty good but the truth about is that, the death benefit decreases in the long run as the mortgage is paid off.
With that, some people call it a kind of term life insurance with a death benefit that diminishes as time goes on.
Even so, there still seems to be people who are interested in mortgage insurance.
You’d hear them asking the question: “do i need life insurance if i have a mortgage?”
If you identify with people who thinks getting mortgage insurance is a good thing, we laid out some reasons why we believe you should avoid it at all costs.
You Don’t Get To Choose The Amount Of Your Death Benefit
One thing that most people don’t like about mortgage life insurance is that their death benefit is proportionate to the mortgage loan that they owe.
It does not matter whether you are seeking temporary or permanent protection. The policy is still the same. In that case, your mortgage life insurance will not offer you full help when the time comes.
You Can’t Choose Your Beneficiaries
It’s only reasonable to say that when you buy life insurance, you would want to be able to choose your beneficiaries. That might be the case with most life insurance packages but not for mortgage life insurance.
On the contrary, all the benefits will go to the lender. Sure, your mortgage might be paid off but this leaves all your loved ones with absolutely nothing. They will have no say in the mortgage life insurance that you have bought.
It Is A Shrinking Death Benefit
When you go to an insurance company and choose an insurance policy, you expect those terms to stay the same until the time when your family picks up your benefits. This will most certainly be the case if you choose to go with a regular life insurance. However, just don’t expect much if you were to get mortgage life insurance.
The rule is that as soon as your mortgage loan is paid off, the death benefit also decreases.
In this case, the only person who will benefit from the deal is the mortgage lender. This is because your monthly premium payments pretty much stay the same. However, you can’t really say the same about your death benefit.
Less Flexibility In Protection
Truth be told that mortgage is not the only thing you need to protect. Just this reason alone is good enough to point out why a regular life insurance is so much better.
At the very least, you get to select what your coverage will be. In that case, whether you get a low or high premium, all the costs will be worth it when the time comes.
Using only mortgage life insurance, when you do pass away someday, how will your family cope with the financial loss?
You will only gain an advantage from mortgage life insurance for a little while. Even then, the benefit is not even that big of a deal.