How Good a Deal Is Your Bank's Mortgage Insurance Plan?
Author:
Ivon T. Hughes
When
you go to the bank to get a mortgage, you'll inevitably be asked to take
out mortgage insurance. The idea behind mortgage insurance is simply that
if something happens to you or your spouse then your loan will be paid off
which is good news for your family and the bank. Most financial institutions
act like they are doing you a favor by offering you mortgage insurance through
their own group plan, but are they?
The
truth is that you could probably get a much better deal and at least an equal
amount of protection by shopping around for your own insurance policy.
Essentially,
mortgage insurance is no different than term-life insurance. With both, your
policy only lasts for a specified period of time and pays its benefits if
something happens to you or your spouse. The real difference comes down to
how much control you'll have over your policy and how much you'll pay for
it.
If
you choose to use the mortgage insurance offered by the bank, you will not
be able to customize a policy to fit your needs and you'll be lumped together
with other borrowers under a group plan. Because of this, you will only have
limited control over your policy. For example, through a third party provider,
you would be able to choose your own beneficiary, decide how to spend the
proceeds if necessary, and cancel the policy at any time. You would not have
these options with a lending institution.
Additionally,
the bank maintains the right to not renew your policy and to cancel the policy
when you sell the house. If you find your own insurance provider, you can
make those decisions yourself.
The
other big difference is cost. A third party insurance policy's premiums will
not go up, so you would pay the same premium today that you'd pay ten years
from now. You won't get that same guarantee from a bank which can and probably
will increase your premiums during the life of the policy. In most cases,
you'll probably pay more through a bank anyway. In fact, you could pay as
much as 40% more than you would if you shopped around and found your own
insurance provider. Not to mention that the policy you take out through your
bank will gradually decrease in value while a plan you select from an outside
source will be worth the same amount during the entire policy period.
Of
course, many people don't mind paying more for their mortgage insurance because
it's more convenient than dealing with insurance agents. The truth is that
you can easily find a policy that fits your needs and provides affordable
premiums via the Internet. An organization, such as the Hughes Trustco Group,
can even generate quotes for you from multiple insurance providers so you'll
know that you're receiving the best deal possible on the policy you want.
The
bottom line is that mortgage insurance is important and should be part of
your home buying or refinancing preparations, but that does not mean you
need to pay more or let the bank make important decisions for you. Instead,
you should find your own personal plan from a third party provider which
will let you stay in control of your policy and will save you money in the
long run.
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Ivon T. Hughes, The Hughes Trustco Group Ltd.
Online Insurance Broker - Get a FREE Quote TODAY!
Tel: (514) 842-9001 Email: [email protected]
Web: www.hughestrustco.com
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