Determining If Mortgage Insurance Is Right for You
Property owners should look carefully for individual disability and life insurance policies before committing to mortgage insurance, says Frank N. Darras, the nation’s leading disability and long-term care insurance lawyer.
Both mortgage disability and mortgage life insurance are often marketed at the tail end of escrow and are more expensive than if the consumer shopped for individual coverage outside of a real estate purchase, says Darras.
Darras recommends you understand the terminology and offers these guidelines:
Mortgage Disability Insurance
- Becoming disabled alters life in countless ways and often is devastating, says Darras. “It is always a good idea to seek a competent and trusted opinion from a disability lawyer who can walk policyholders through the features, advantages and benefits of their coverage, educate them on the claim process and guide them through the complex and difficult task of the paperwork.”
- Find a licensed insurance agent that you know and trust. Make sure to get a disability policy that will provide enough in a monthly benefit to keep a roof over your family’s heads, food on the table, clothes on the kids and gas in the family cars.
- Always buy non-cancelable, guaranteed renewable coverage with occupation specific coverage for at least 5 years or to age 65, if you can afford it. That way, if disability strikes and you are forced to move, you won’t lose your coverage when the house is sold.
Mortgage Life Insurance
- This type of life insurance is usually offered by mail and comes from your lender or an insurance company affiliated with that lender.
- Purchase life insurance based on a broad range of needs and be careful not to isolate your choice to repayment of your mortgage alone. Usually, your needs include more than paying the mortgage.
- Your best bet is to analyze your financial situation, based on liabilities you, your spouse and other dependents would face and how much income they would need to replace if you die.
For over 20 years, Frank N. Darras has been providing free consults to the real estate industry and has assisted many hundreds of fine people with policy, claim and litigation concerns.