Mortgage Life Insurance is one of those Insurances that not many individuals completely get to grips with. When you apply for a mortgage, your attention is fixed on having it approved, so when a lender tags on the Insurance you accept that it is necessary. If you look through this type of policy from your lending company, you will find it is no more than Term Life insurance. In other words, the value of the life insurance drops as the insureds mortgages drops, but in most cases, the rates go up based on five-year spans.
Instead of this sort of insurance, have a look at individual life insurance which is certainly more premium friendly.
You are able to combine life insurance and debt protection with this type of scheme or you can tailor it to suit your debt needs. The most efficient answer from a purely financial angle is to join the two requirements. In addition, by taking out individual life insurance for a mortgage, you can choose whether to make it a Term policy or a Permanent scheme Term insurance plans are fixed for a stated term, such as a 10, 20, or 30-year term. If you want a scheme to run for your lifetime as well as know how much is being paid out each month, then the Permanent scheme is the best one for you. If you are looking to have a lump sum of money, then a Permanent scheme is possibly the best one for you, as you can build up a cash sum which will pay out at a pre-set point.
Below are some more perks you could expect to have if you took out individual life insurance:
- You are not stuck with the scheme, if you move or change banks the scheme can be tailored to accommodate this.
- You choose who is the assignee, not the bank.
- The individual policy pays out double in the case where both spouses die.
- You are not limited to one or the other, you can have both Permanent insurance and Term insurance under one policy.
- Just because you have paid your mortgage up, doesn't mean that you have to cancel your scheme.
Delivered by Lorne Marr, life insurance quote broker from Markham, ON
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