Where to choose Mortgage Insurance-Bank or Insurance Company?
While mortgage insurance is offered to people who finance their homes, in general, it is the same thing as life insurance. It is essentially just another form of it. The only difference is that a bank provides it, rather than an original broker. People are usually offered this coverage when they obtain their mortgage. Is it the best choice, though? If mortgage insurance is a form of life insurance, would you be better off acquiring the latter through an actual insurance company?
This article will break down a couple of the key differences between these types of coverage.
When you go with a legitimate insurance company, you have full ownership of the policy. When you use a bank, the lender owns the system.
2.Amount of Coverage –
With insurance companies, you can purchase any amount of coverage. You can even add more coverage to your existing plan. With a bank, your coverage is only for the outstanding amount of your debt. As the debt increases, so does your coverage.
With traditional insurance companies, you choose your recipient. When dealing with a bank, the lender is your beneficiary. The death benefit automatically pays off the mortgage, no matter what the circumstance of your dependents is.
When dealing with an insurance company, you are buying from a specially trained broker or agent. They have been trained to understand the ins and outs of your policy, and it is their business. When you get coverage from a bank, you deal with a bank employee who receives little training on an individual’s insurance needs.
5.Terminally Ill Protection –
If you become terminally sick or are laid off and can’t pay your mortgage. However, you can still pay your (much lower) insurance premium, you will be able to keep your insurance, and the death claim will be paid when you die. If you only have coverage from a bank, become terminally ill and can’t make your mortgage payments. You lose your coverage, along with potentially losing your house.
The choice of insurance is entirely up to you. When it comes down to it, though, the above five points should be considered. Life insurance through a real insurance brokerage is the best protection you can have for both yourself and your mortgage. Next time you find mortgage insurance, think about if those premiums could be better used on life insurance.
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