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In the current atmosphere of real estate laws, fine print clauses and terminologies, it can become quite tedious for a novice. Buying a house fifty years ago and now is like comparing buying a loaf of bread and learning how to bake bread. There are many factors to consider when buying a house; first, you have to find a house that you like. Then you have to find a mortgage company that offers the best terms and interest rates and what package to go with. There is also the issue of life insurance among other things.
It is a requirement of lending institutions that you get life insurance when you take out a mortgage. Many would agree that taking on a mortgage is the largest investment most people will encounter throughout their lives. In no uncertain terms as the saying goes “tomorrow is promised to no man.” Therefore, it is wise to make provision for your mortgage to be paid in the event of grave illness or death, so loved ones can benefit.
There are different types of life insurance, and it is strongly advised that one researches each of them to know which suits best. Mortgage companies nowadays offer their own brand of life insurance but again I urge people to know what’s out there.
Insurance policies offered by mortgage companies are normally more expensive and are sometimes offered to customers without regard to their situation. This type of insurance offered by mortgage companies is one in which the actual policy benefits the mortgage company rather than the person insured. How it works, is in the event of the insured person’s death, the proceeds from the life insurance go directly to the mortgage company to pay off the mortgage, and not your family. Another downside to the mortgage company insurance is, no matter how much you pay on your policy, your premium remains the same.
Overall there is no flexibility with mortgage insurance, and it is highly advisable to seek insurance through an independent insurer. Insuring with an independent insurer guarantees that your family is the beneficiary of your policy, and there are different policies to choose from.
Level term life insurance
In this type of coverage, you decide the size in dollar amount coverage you want and the duration of the policy. A joint life policy is also available, where two people are under the same policy.
Level term life and critical illness insurance
Similar to level term life insurance only difference is in the event you are diagnosed with a critical illness in the duration of the policy, the insurance amount is paid to you. Joint life policy is also available with this.
Mortgage protection life insurance
This type of insurance caters to your mortgage. The coverage amount reduces every month in relation to your mortgage.
Mortgage protection life insurance and critical illness insurance
This kind of insurance includes all of the above, the coverage amount reduces every month with your mortgage and pay-out is made in the event of death or diagnosed with a critical illness.