You Purchased a Home
If you have have purchased a house or are in the market for one, mortgage insurance is going to come up. While insurance is important, some is more “useful” than others and it is important to be informed on why term life insurance could be better for you than mortgage insurance.
Mortgage Insurance coverage is reduced every time you pay your Mortgage.
The way mortgage insurance works is it only covers the outstanding mortgage balance, which means that as your mortgage decreases, your coverage decreases, but your payment stays the same. With life insurance, you are covered for the full face amount at the beginning of the term, through the term, right up until the very end.
Mortgage insurance is often more expensive than standard Term Life Insurance.
Because in most cases, mortgage insurance lumps smokers and nonsmokers together when determining rates, if you are a healthy nonsmoker, rate for standard term insurance can be up to 25% cheaper for level coverage.
Mortgage insurance benefits your bank, not your Family.
It is not surprising that since the mortgage insurance covers only the outstanding balance of your mortgage, the bank is also the beneficiary. In the case of Term Life Insurance, you choose the beneficiary, so that when it matters most, your family will have the resources to pay off the outstanding mortgage, or whatever their most pressing need might be at the time.
Mortgage life insurance is not transferable.
If you sell your house or change your mortgage company, your policy ends and you will need to reapply (typically at a higher rate). With Term Life Insurance, the policy is linked to you, not your bank, you have the freedom to sell your house, switch lenders, move, etc.
These are just a few of the reasons why term life insurance can be a better option than mortgage insurance. For more information or to find out what your rates would be, click here to complete our short contact form.