Banks and lenders may discuss mortgage insurance with you when you purchase new property. Mortgage insurance makes sure that your family does not get burdened with mortgage payments in the case that you die. But take a step back before considering getting mortgage insurance. There is a lot you need to know before signing those insurance papers.
* Mortgage insurance rates vary from company to company or bank to bank. If you plan on getting mortgage insurance, don't go with the first person who talks to you about this. Shop around first.
* Mortgage insurance only pays off the debt you owe from your mortgage. So if you die, you don't actually cover your family for their daily expenses. All the money you paid for mortgage insurance goes to the bank or the lenders.
* If you switch to another bank when you need to renew your mortgage, you will have to apply for new mortgage insurance. Any new illnesses or health conditions you might have developed might disqualify you with the new bank.
* Your mortgage insurance gets terminated when the mortgage is paid off. It may also be terminated when you reach a certain age. That's a huge amount of money put to waste.
* You cannot name any beneficiaries with mortgage insurance. The only beneficiary of your premium is the bank or the lender.
Getting mortgage insurance might be tempting, but it's good to study what it really is and what it offers before signing anything. You might be better off spending your money elsewhere. Life insurance might even be a better option for you.