One area of Insurance that few individuals can get to grips with is their Mortgage Life Insurance. These types of plans are often taken out when a lender approves a mortgage and the person applying for the mortgage just accepts it as part of the transaction. Mortgage Insurance through a lending organization is essentially, decreasing Term Life insurance. In other words, the value of the life insurance declines as the insureds mortgages declines, but in most instances, the rates go up based on five-year spans.
An alternative to mortgage insurance is individual life insurance which is more productive and easier on the pocket.
Individual life insurance can be adjusted to the amount of your mortgage, or the insured can combine their life insurance needs with their debt protection needs. The combining approach generally makes more sense, as it gives a more complete insurance solution. Individual life insurance for a mortgage debt, will either be Term or Permanent insurance. Term insurance plans are fixed for a agreed term, such as a 10, 20, or 30-year term. Whereby, a Permanent plan can provide level premiums for the insured’s lifetime. Permanent plans can also build a cash lump sum and can be paid up in a limited total of years.
Below are some other advantages you could expect to get if you took out individual life insurance:
1. You are not stuck with the plan, if you move or change lenders the plan can be moved to accommodate this.
2. You decide who is the recipient, not the lending company.
3. The benefit is doubled if both partners died.
4. Individuals can put together Term and Permanent insurance needs under one scheme.
5. Just because you have paid your mortgage off, doesn’t mean that you have to finish your plan.
Prepared by Lorne Marr, life insurance quote professional from Ontario
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