Mortgage Insurance vs. Life
By Janice Campbell
Who would you rather have as your beneficiary – your
family or your lender?
We all know that protecting your family
from the financial worries of the cost of your mortgage with life/mortgage
insurance is important. If you have an
individually-owned life insurance, you
own the policy and you name your
own beneficiary, rather than having the lender as your beneficiary. Protecting
your mortgage with an individually-owned life insurance, you can have better
guarantees and greater choices. You can choose the amount of coverage that you
wish, not just the amount of the mortgage. When your mortgage is paid off, you
still have the life insurance, if you still wish to keep it. You also have the opportunity to convert all
or some of your policy to a permanent life insurance policy.
Valuable information to know:
1. You don’t need to have your mortgage
insurance with your lender in order to have the mortgage.
2. Even if you have already signed to
accept the mortgage insurance with your lender, you can cancel this insurance,
without affecting your mortgage. (Never cancel existing mortgage
insurance until you have your new individually-owned policy approved)
3. When you have mortgage insurance with
your lender, the face amount decreases as the mortgage decreases – your
premiums don’t necessarily reflect this.
4. With individually-owned life insurance,
your premiums are based on your age, health and smoking status. This means that if you are a non-smoker you
would save some extra money.
5. If you sell your house and are required
to get a new mortgage, and have had a health change, you may have difficulty
re-qualifying for mortgage insurance with your lender. But you are not required to re-qualify for
life insurance if you have an individually-owned policy.
If you have mortgage insurance, your mortgage is paid off upon
death. This means that they are insuring
the first to die and the balance of your mortgage is paid off. When you have individually-owned life
insurance, you would still have life insurance on the surviving spouse and you
would receive the full amount that you selected for your coverage, without any
reductions as your mortgage decreased.
As you can see, individually owned life insurance
can financially protect your family if a death occurs. Another concern that you may have, is what
happens if you become critically ill and are unable to work. You are able to protect your families’
financial situation with Critical Illness insurance. Your policy would provide
you a predetermined lump sum of money 30 days after diagnosis.
Janice Campbell, Financial Advisor -
firstname.lastname@example.org (Ariticle from Women with Vision magazine)