Lender Mortgage insurance: Not always a sure thing
If you have a mortgage on your home, chances are good you also have mortgage insurance. The idea is that if you should die before paying off the mortgage, the coverage will kick in and pay it off for you. It’s meant to offer peace of mind and to reassure you that your family will be able to stay in your home if anything should happen to you.
The reality falls a little short of that. Families that are faced with making a claim who bought their mortgage coverage through the lender thought they were protected, only to have their claims denied when they died.
The lender offers convenience, but individual mortgage insurance offers portability and flexibility.
By going through Bayside Associates you can obtain your mortgage coverage with the best possible rates as well you are able to:
- Renew or convert it whereas at a lender it is non-convertible
- Transfer the coverage to any house you purchase in the future whereas at the lender it runs out when the house is sold
- Choose the amount of coverage and the coverage does not decrease as the mortgage declines whereas at a lender the coverage decreases as the mortgage is reduced but yet the premium does not reduce
- Own your own policy whereas mortgage insurance through the lender is owned by them as a form of group insurance and as a result they have the ability to cancel the group policy at any time
- Decide the beneficiary which allows the beneficiary to decide on how they chose to spend the death benefit, if held through the lender they are the sole beneficiary and they will use the benefit proceeds to pay down the remainder of the mortgage
- Keep the death benefit consistent whereas through a lender as the mortgage decreases the coverage drops yet you remain paying the same premium
- Qualify for preferred rates yet coverage through a lender does not take your health into account and you are grouped into group rates
- Know that your coverage is underwritten up front with a personally held policy and if approved you can be confident that the death benefit will pay out if the policy is in good standing whereas coverage through a lender is underwritten at death which can result in a denial at the time of claim
- Even after your mortgage is paid off you can continue on with a personal policy on provided you continue to make the payments whereas through a lending institution once the mortgage is paid off you no longer have coverage
Mortgage Insurance Comparison
|
Individually-owned Mortgage Insurance |
Through your Mortgage Lender |
|
Insurance Plans Available
|
Term or Permanent
|
Term
|
|
Beneficiary
|
Anyone you decide
|
Your Mortgage Lender
|
|
How Insurance Proceeds are Used
|
Your beneficiaries decide. If the mortgage rate is low, it may be better to invest the death benefit rather than use it to pay off the mortgage.
|
Pays off the mortgage
|
|
Premium Frequency
|
Monthly, quarterly, semi-annually, annually (depending on the carrier)
|
With your mortgage payment
|
|
Additional Life Insurance Needs
|
You can take care of all your other insurance needs with one policy
|
Only covers the mortgage
|
|
On Going Coverage
|
You're either covered until age 80 or you can convert to any eligible permanent or universal life policy; depending on your policy’s provisions
|
Your insurance ends when your mortgage is paid off
|
|
Portability
|
You insurance stays with you even if you refinance or change lenders
|
If you move your mortgage, your insurance ends and you have to re-qualify with the new lender. If you refinance your mortgage you may need to re-qualify, even though you're with the same lender.
|
|
Insurance Benefit
|
You can get a level benefit, or you can decrease your benefit over time to match your mortgage
|
Decreasing insurance benefit as your mortgage decreases
|
|
Premium Guarantees
|
Your premiums are guaranteed, as per the contract
|
Premiums are not guaranteed
|
|
How long are Premiums Paid?
|
Will vary depending on the plan chosen
|
As long as the mortgage exists
|
|
Premiums
|
Your premium is based on gender, smoking status, health and lifestyle factors
|
Grouped
|
|
