Having your family home mortgaged in a bank is probably one of the most stressful undertakings one goes through — there is the monthly amortization payment, the insurance premiums that lenders’ require and the likes. Bearing these in mind, the household must prepare for any uncertainties that might come resulting to bigger worries.
One would not want the foreclosure of his home, leaving loved ones displaced or homeless, right? This is when the protection and security of insurance firms comes necessary.
Life insurance mortgage is created to address the scenario that might arise from the situation cited above. It is there to repay one’s mortgage in case of death, disability or any critical illness. This leaves great peace of mind to the family left behind, without having to worry anymore on the condition as to the ownership of the home since it is automatically knock-off and cleared from mortgage after having been paid in full. This type of insurance is usually offered by the lender, with the primary intention of securing the loan. This saying, in case the policy takes into effect, all proceeds goes to the directly to the bank, while the surviving family does not have the discretion as to how to spend the settlement. This is the major disadvantage of choosing a life insurance mortgage rather than traditional life insurance available in the market. However, for those borrowers with medical problems, this might be the best option available since they do not have to go through medical screens. This in fact brings a lot of convenience to the borrower. But convenience has a price, and this type of coverage is usually priced higher than the usual since it can just admit anyone, discounting the risk there is.
Taking a look at life insurance mortgage on its entirety, obviously the cons outdo the pros. Even financial analysts would not recommend purchasing one. More than considering the points discussed above, the restrictiveness of the insurance product gives it a no deal for many.
If and only in cases of death, disability, or critical illness do the policy takes effect. Otherwise, you still don’t get the peace of mind or in times when you outlive the mortgage. Thus, it will just be a wasteful expenditure.
If one seriously considers a protection for himself and his family, best way to do is to shop around and compare which one’s a good deal to have. Consulting a financial expert, while taking into account the financial stability and condition can very well dictate which the best way to go is. The liberty of appropriation that comes along excellent financial planning still gives the strength to take on even uncalled for situations.
In conclusion, nobody can ever push you through what type of policy to purchase. The decision must be based upon your judgment in consideration of several factors that only you can comprehend. Whether you go for a life insurance mortgage or any other types of policy, the most important thing to consider is the welfare of your family in the event of loss of income.
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