I often still get questions on whether I should buy Term Life Insurance or Mortgage Insurance from a Bank or other lending institution. So I created the following comparison between the two products. I think it will become obvious that Term Life Insurance is much better value for the $$ than Mortgage Insurance. Have a look and you can decide...
Term Life Insurance
- You Purchase an individual policy.
- Your own the policy - you have complete control over it.
- You have a premium rate that is guaranteed in advance,
the company cannot decide to change it.
- You may purchase any amount of coverage that will
never decrease over the Term of the coverage.
- The insurance company cannot cancel your insurance if
premiums are paid, only you can.
- Your individual policy is fully portable. It is not
connected to the mortgage and if you re-finance your
mortgage with another bank, you do not need to
- You can convert this policy, regardless of your health.
- You decide who your beneficiary is. Upon death, your
beneficiary will receive the proceeds and your
beneficiary decides how and where to use those funds.
The proceeds of a life policy are protected from all
creditors, including a bank.
- If you use level term, and insure both the husband and
wife individually, then both policies pay benefits in the
event of both deaths.
- You are buying the coverage from a licensed broker or
agent who has been trained to understand your overall
need for life insurance and how to integrate that with
your total need.
- The coverage is under a group policy.
- The bank owns the policy - you have no control over it.
- The group policy premiums can be changed if the
company decides to raise premiums for the group.
- The coverage is for the outstanding amount of the debt.
As your mortgage reduces, your insurance decreases.
- The policy can be cancelled by the bank or by the
- The coverage will terminate if you re-finance your
mortgage, or if you sell your house, or if you pay off your
mortgage, or if the bank forecloses on your mortgage.
- The group mortgage policy is not convertible.
- The bank is your beneficiary and the death benefit is
automatically used to pay off the mortgage, regardless
of the wishes or circumstances of your dependents.
- If you and your spouse are both insured on a bank
mortgage policy, then only one payment is made in the
event of both deaths.
As you can see above there are many reasons why owning traditional life insurance where your family is the beneficiary and not the bank is a superior choice.
If you would like to discuss the benefits of Term Insurance over Mortgage Insurance please give me a call at 902-626-6637 or drop me a note at [email protected] .