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Just bought a house and start receiving alot of letters about mortgage protection plan, are these worth having ? If so, any companies that you guys can recommend ? How's the premium like ?
I look at the coverage and it includes death, critical illness, Unemployment ! Sounds like it's much better than my regular life insurance ! maybe there's a catch somewhere...
Just bought a house and start receiving alot of letters about mortgage protection plan, are these worth having ? If so, any companies that you guys can recommend ? How's the premium like ?
I look at the coverage and it includes death, critical illness, Unemployment ! Sounds like it's much better than my regular life insurance ! maybe there's a catch somewhere...
Here's a link that cover's most of your questions. It's actually an Insurance Plan not unlike most other Life Insurance/Disabiity Plans. Except it's directly linked to your Mortgage Loan only. Any payouts ONLY go to the Mortgage Holder and not you or your family if you die.
What it does is protect your house from getting re-taken by the Lien Holder for inability to make payments. I strongly suggest you read the fine print tho. Insurance Companies often bury loopholes in there they would allow them to defer from payouts. One example..It may not kick in until you have paid 2 years worth of premiums...That happened to someone I knew/ and it only paid out what Premiums had been paid as the policy was 18 months premium paid when he passed
Much much better to have a term life policy and disability insurance.
Is it because of life/disability insurance has much much better premium ? This plan covers some months of unemployment which seems attractive.
I don't have much idea about the premium to be paid for this kind of mortgage protection plan. Any typical numbers for monthly premium ?
Is it because of life/disability insurance has much much better premium ? This plan covers some months of unemployment which seems attractive.
I don't have much idea about the premium to be paid for this kind of mortgage protection plan. Any typical numbers for monthly premium ?
Yes, the premium will be much lower. And, more importantly, you or your beneficiaries can use tge mobey how they need to use it versus the funds automatically going to pay off the mortgage. Think thru this - if you die, are you sure your spouse would stay in the house? Yes, I know, your spouse coukd just sell the house with no mortgage and pocket the money, but what if rwal estate values dropped? Or what if your spouse wants to stay in the hoyse but keep that low interest rate mortgage?
Life insurance premiums are all over the place, based on your health, age, quality of the insurance company, the amount of commission going to the sales agent, etc etc etc. Stay away from whole life. How To Shop for Term Life Insurance | Clark Howard
The above info, about the downsides of what are essentially insurance policies that ONLY cover your mortgage obligations are mostly accurate, but neglect the GIANT negative of these things -- namely the longer you have the coverage, and presumably the more you've paid into it, the LESS coverage / payout is. The math is simply: it is essentially a term policy with a SHRINKING benefit! Your mortgage balance is smaller the longer you pay it down and the premium is fixed, that means potential for GIANT profits for the issuer.
I've worked for insurance firms (in a role that involved IT, not sales) and the actuaries that present the economics of various products to executives LOVE situations where they can offer something that has the potential for large profits / declining payouts... The actuarial likelihood of anyone having to tap into "coverage" for temporary unemployment is one of those "marketing hooks" that clearly is resonating with the OP but the fine print typically means the actual payout is EXTREMELY small relative to the total indebtedness -- Radian now offering an industry first
Short answer: Bad deal for borrowers, huge profit for insurers... Much smarter: Build up an emergancy fund to cover short term issues and get nice cheap term life insurance for real catastrophes. If you want to cover yourself against disablement / loss of income get insurance for it, but realize that such things are generally quite rare -- 4 Biggest Aflac Competitors The fact is there are very much competing interests that benefit from distorting the data around this, ask yourself: How many folks do you directly know that have benefited from such things? Probably very different based on factors like what kind of life you have -- The Odds of a Disability Are Themselves Odd|NYTimes.com
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