Business Page: How should I protect my mortgage? Is mortgage insurance with lender the best option?

You have worked hard to be able to enjoy your home to share with your family. But what if something happened and you were no longer able to make your mortgage payments? Many of us ask ourselves this question on a regular basis. When applying for the mortgage with a bank or another lender we are asked if we want to protect our biggest investment (our home) with the mortgage protection insurance. First time buyers need to ask themselves a question – what coverage is better to protect my mortgage, TERM life insurance or mortgage protector with the lender? Let me explain the main differences between mortgage protector insurance and TERM life insurance.

1. Mortgage insurance with lender/bank does not pay the outstanding mortgage balance (if death occurs) to you as a client. The insurance company pays directly to the lender you have the mortgage with. With the TERM life insurance, you have the option to name a beneficiary. If the unexpected happens the total death benefit is paid to the beneficiary, tax free, while you can use the money to cover the outstanding mortgage.

2. In a mortgage insurance with the lender the coverage is not transferable. If you change lending institutions or the mortgage term is up for renewal you will have to reapply for the mortgage protection insurance again, while usually at that time the premiums are higher due to our age moving forward. The TERM life insurance coverage is transferable and your policy may be continued for as long as you wish even after your debt is paid off. It is a portable plan that can be used to cover any debt anywhere. A TERM life insurance cannot be cancelled by the lender, it can only be cancelled by you.

3. Mortgage coverage decreases with each payment you make for your mortgage, however, the monthly fee that you pay for your mortgage protector insurance does not decrease. In a TERM life, the mortgage coverage is level where premiums remain level and so does your mortgage coverage even as your mortgage reduces. For example if you mortgage now is $500,000 and in 10 years your mortgage is reduced to $400,000, a TERM life insurance policy paid out to your beneficiary is $500,000 – the original death benefit you applied for.

4. No cash back option available on mortgage insurance with the lender. If you choose to protect your mortgage with life insurance you do get the option of getting all your premiums back when you decide to surrender the policy.

My suggestion is to choose a TERM life insurance plan that can be used to protect both your family and your home. Unlike your lender's mortgage insurance plans, TERM life insurance policies are more affordable and allow you to choose your beneficiary. A TERM Life Plan can save you up to 40% and put financial control back into your family's hands. Ask me now how to beat your lender and gain access to affordable and simple insurance plans that will protect more than just your mortgage. Get your free, no obligation quote today!

Aneta Malinski
Sales Representative
647-472-6402
[email protected]

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