Mortgage life insurance is a form of decreasing term insurance usually sold by Financial Institutions and is usually not the best option. Separate Term insurance rates are compared on Rate Showroom and are a better option because of these points:
- Portability – Once you buy a traditional mortgage policy, you are locked in, if you want to change your mortgage you have to re-apply again at your current age and health condition
- Underwriting – Traditional term policies are medically underwritten at the time of the application, leaving no doubt your beneficiary will be paid, where mortgage insurance wait till you die before they underwrite, always leaving doubt if the amount will be paid
- Beneficiary – You choose who the insurance is paid to with traditional life, the bank gets the money with mortgage insurance, and they only pay the current amount of your mortgage, not the original amount you purchased
- Length of coverage – You choose the length of coverage with traditional life, anywhere from 5 years to 40 years, banks only write a policy for the term of the mortgage, not the full amortization There are many different plans and mortgage life insurance options. Some plans cover the entire balance outstanding on the mortgage, while others cover only a percentage.
However, you can find significant savings by shopping around. With a few minutes of your time you could save yourself a meaningful amount of money while giving your loved ones the safety and security of a mortgage life insurance plan.