Transfer wealth or leave an inheritance.Help replace lost income of a wage earner.But there are several other reasons you need life insurance, especially if you have children.Īccording to LIMRA, a research and consulting firm, the top three reasons people buy life insurance are to: If you purchase a mortgage protection insurance policy, you might think you’re in the clear. Your mortgage is just one piece of the puzzle Of course, life insurance prices can vary depending on your age and health, so make sure you run your own numbers before you decide if this is the best option for you. So, you’re paying less for a death benefit that stays the same throughout the life of your mortgage. Level term insurance offers a level death benefit for a level monthly premium throughout the life of your chosen term. However, if the same woman were to buy a 30-year level term insurance policy with $100,000 worth of coverage, she’d pay as little as $16.68 a month, according to Policygenius. For example, according to State Farm in December 2017, a healthy 25-year-old woman living in Illinois would pay as little as $22.45 a month for $100,000 worth of coverage. It’s expensiveįor a policy that offers diminishing benefits over time, mortgage protection insurance is surprisingly pricey. If you received a letter in the mail offering mortgage protection insurance, here are a few reasons you should toss it. 3 reasons you should avoid mortgage protection insurance Mortgage protection insurance, on the other hand, is completely optional. PMI typically is required on a conventional mortgage if your down payment is less than 20 percent of the value of the home. Mortgage protection insurance isn’t the same as private mortgage insurance (PMI), which is designed to protect the lender if you default on your payments. Rather, the lender sells your information to insurance companies that specialize in selling that kind of policy. Typically, it isn’t your lender that will offer to sell you mortgage protection insurance. However, this type of policy is less common. In some cases, mortgage protection insurance also can provide coverage if you become disabled. Your monthly premium, on the other hand, stays the same throughout the life of the policy. In other words, the death benefit on the policy is designed to go down over time along with your mortgage balance. Mortgage protection insurance is a decreasing term life insurance policy. Although it seemed logical for me to get some kind of coverage to pay off my mortgage in the event of my death, mortgage protection insurance wasn’t that coverage. Mortgage protection insurance is a life insurance policy that pays off your mortgage if you die prematurely. Here’s why I decided to throw all those offers in the trash bin.
The letter contained information about me and my mortgage loan.Īs I read through it, though, I realized it was a solicitation to purchase mortgage protection insurance. Based on your creditworthiness, you may be matched with up to five different lenders in our partner network.Īt first, I thought a mortgage lender was trying to set up monthly payments or an insurance company was trying to sell me homeowners insurance.
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