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Financial

Mortgage Life Insurance vs. Personal Life Insurance

Mortgage Life Insurance: The Questions to Ask
It’s time to take a look at your life insurance policy and ask questions like: Who owns it? And, more importantly, who benefits? The answers might surprise you.
Mortgage Life Insurance
When you apply for a mortgage, your lender may try to convince you that you need mortgage life insurance. This is really just another type of bank owned life insurance. The lender assigns you to a group policy and the lender is the owner and beneficiary of that policy. 

The terms of typical mortgage life insurance are as follows:

  • In case of death, the lender benefits financially to pay off the rest of the mortgage.
  • The lender has complete control to cancel or alter your mortgage life insurance policy at any time. You cannot change, alter, renew, convert, or transfer your policy.
  • The policy is tied to your mortgage, thus you are only insured for that amount. Coverage ends when the mortgage ends or is paid off.
  • You pay the same as everyone else in the plan, regardless of age, lifestyle, or health status.

Personal Life Insurance
Unlike banked owned life insurance plans, personal life insurance places you in the driver’s seat of your policy. You own the policy, and you name the beneficiaries who will receive your benefit directly in case of critical injury or death. Your benefits are guaranteed, may only be changed by you, and are directed by your lifestyle and choices.

Critical Illness Insurance
Critical Injury Insurance is a type of personal insurance. However, you can acquire critical illness insurance through the bank, much like mortgage life insurance, as well as through insurance agencies. Critical illness insurance benefits you and your family through features like:

  • A lump sum benefit to utilize as needed in paying off medical expenses, etc.
  • Coverage for your dependents, including your life partner, spouse, or children.
  • No obligation to submit receipts.
  • A policy that can be retained during change of employment and other life events.

Critical illness insurance helps you and your loved ones absorb the impact of your health-related expenses, whether anticipated or not. Owning this kind of insurance helps provide peace of mind for life’s twists and turns.

Why Choose Personal Life Insurance over Mortgage Life Insurance?
It’s important to secure personal life and critical illness insurance for the sake of your family and loved ones. That’s why we recommend individual term life insurance, which can work for the short duration of your mortgage loan and never decrease as you pay it off. That way, if something were to happen to you, your family would be able to decide how to apply the benefits, from paying funeral costs to investing long-term.
To find out more about your personal life insurance options, get in touch with Higgins Insurance at 1-866-273-2911.

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