Have you ever heard anything say "just sign here". If you've recently purchased a home using financing from your local bank subject I could roughly guarantee that you have. Many banks sell mortgage insurance to cover your speculation in the event that you die prior to paying off your debts. Essentially, if you die premature your spouse now owns a mortgage free home. Sounds great, right?
In an ideal world this would work perfectly, but I have a few gripes with mortgage insurance offered by the bank. Hopefully the following data will help you to perform your due diligence when choosing either or not this type of coverage is best for your family.
Life Insurance
1. The vast majority of time this procedure was sold by some one who is unlicenced to sell life insurance. As it was sold this way, it is not ordinarily a true life insurance policy. The insight of mortgage life insurance is often lost on the mortgage agent as selling it is as easy as saying, "Just sign here.".
Four Things to Think About Before Signing Up For Mortgage Life assurance
2. The bank positively owns the policy. You do not own the mortgage life insurance procedure that the bank just sold, which puts the bank in control. This creates a range of issues.
3. The bank is positively the beneficiary on the procedure as well. If you pass away with a mortgage procedure in force, and the bank positively pays (which isn't all that often) they receive the proceeds for the mortgage balance. If you had an private procedure then your spouse could elect to use the money differently.
4. My biggest gripe with mortgage insurance by far is the fact that the policies are underwritten at the time of claim (death). This is very disturbing, as the bank can legally look at the circumstances surrounding the individual's death, and find a way to retroactively deny the claim. The spouse would then only receive a reimbursement of premiums paid. You could pay for mortgage insurance for 30 years, and lose the claim based on something that they found. Insuring your mortgage straight through a life insurance business is far better as they will underwrite you prior to issuing the policy. If you did not commit fraud on your application this will guarantee that the procedure will pay your beneficiary as long as the premiums are paid.
Those are my biggest issues with mortgage insurance being offered by a lender. There are many other reasons such as decreasing coverage without decreasing premiums, or the fact that the bank reserves the right to cancel the coverage at any time based on a group rating. However; in my idea the four reasons above are the best reasons why anything would consider mental twice before signing on that line for mortgage insurance.
Four Things to Think About Before Signing Up For Mortgage Life assurance
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