When I bought my first home I was offered mortgage protection cover. The agent doing the closing indicated to me that this would be a good deal. The idea behind mortgage protection insurance is a good one. What it does is allow you to have your mortgage paid if you are disabled or incapacitated in any way or form including death.
Taking on a mortgage is a big deal. You are signing up for a massive amount of debt for a very long period to time. You do not really know what will happen to you over the lifetime of that loan. Of course you want the insurance coverage since the cost of it is so minimal and the idea of it is very comforting.
If you do decide to explore mortgage protection insurance cover you should definitely check the inclusions and exclusions. Find out how much would be paid and when. You should also find out what qualifies as disabled or incapacitated. Check preexisting conditions also. If it is determined that you had some preexisting condition, then maybe you will not be paid. Another thing to look for is if there is some clause that will allow you to have more than just the mortgage paid for. For example, some policies will also pay the premiums for you.
With the mortgage catastrophe that has occurred during the years 2008 and 2009 I can see why someone would want to sign up for mortgage payment protection cover. There are a couple of things you should consider before immediately signing up for this insurance. One thing to check on is the cost of the insurance from the bank and the cost of the insurance from an insurance agent. The bank insurance may be considerably higher than the insurance company.
Another thing to consider is what my realty agent told me after I had told him we had been convinced to sign up for this mortgage protection life cover. He indicated that this form of insurance is a decreasing insurance. If you think about it the insurance policy pretty much only pays the mortgage that is left owing at the time you need it. That mortgage will decrease over the life of the loan. The two hundred thousand dollar policy you take out today may only be worth one hundred thousand at the time you may need it. It is also very specialized insurance. It can only be used for the payment of the mortgage at the time you are disabled or die. My realty agent gave me the advice that I should look into accomplishing the same thing via other kinds of insurance.
As you look into the responsibility of taking out a loan the consideration of mortgage protection cover should be taken very seriously. Consider all options and costs, then make your decision based on those facts.
By Sam Fileding
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