Mortgage Life Insurance Not Always a Good Idea

Before the boxes are unpacked or the equity check has been received, a homeowner will be inundated with offers of mortgage life insurance, among other bothers from the mailbox. As public records are filed after a mortgage is completed, leads are generated for insurance companies and the calls begin. Some homeowners may be tempted at the offer to purchase insurance that would pay off a mortgage upon their death.

The only problem is that the policies are often grossly overpriced, the premium will increase as property value increases, but the payoff amount decreases as the mortgage balance goes down. Paying more money for less coverage may seem like an easy choice, but the insurance company does not present it that way. A pitch is along the lines of, “Who will take care of your debt, leaving your family financially secure?” Again, the problem is the inflated amount that would be paid each month for the insurance. Unless a better deal comes along, mortgage life insurance is not worth the money.