Is there any downside or upside in buying life insurance from my home mortgage company?
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UPDATED: May 10, 2010
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Insurance Question from San Jose, CA
Asked on 05/10/2010
Is there any downside or upside in buying life insurance from my home mortgage company? NULL
Answer given on May 23, 2010
There are a few downsides to buying life insurance through your mortgage company. The first is that you are generally buying a decreasing term policy. This means that, although your premiums remain the same over the life of the policy, the amount of coverage goes down as your mortgage goes down. This isn’t a bad thing – except that you can buy a policy on your own, with similar premiums, and the coverage stays the same throughout the life of the policy.
The second major reason is that, in the event of your death, your mortgage gets paid off. Again, that’s okay, except that the beneficiary doesn’t have the opportunity to say, for example, that they’d rather pay off some medical bills, pay towards your children’s education, or pay on something else.
Basically, the downsides are that this type of policy is more restrictive than what you may be interested in.
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