Term Life Insurance Alberta: Don't Confuse Your Mortgage Insurance
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As you start the process of applying for a home loan, you will probably get into discussions concerning mortgage insurance.
One of the first mortgage insurance lenders will discuss, if you have a low down payment, is the purchase mortgage insurance which protects them against you not paying the loan back.
If you have a small down payment, the bank will be talking about insurance to protect himself. The borrower is so little invested in the property, that once the mortgage payments become difficult, or the value of the property depreciates, he may abandon it. In a low or no money down mortgage, the buyer has risked no substantial amount that would make him protect his investment as much as he can.
So the bank insists upon an insurance policy that will protect him if the homeowner does not continue his mortgage payments. The lender is the beneficiary of this kind of mortgage insurance.
The other type of policy concerns the borrower who is concerned that his family will not be in a position to keep the home if anything should happen to him.
The main wage earner would get a policy that would protect his family and allow them to keep the home, in case anything happens to him.
If you want to protect your family in the event of your death, you would subscribe to mortgage life insurance, which would pay off the outstanding balance on your home in the case of your death. Most mortgage life insurance policies are decreasing term, which means that the residual benefit of the policy decreases over time, as the loan decreases in outstanding value. There is no need to continue paying the premium on a $200,000 mortgage as the mortgage gets lower and lower with each mortgage payment.
For those who are concerned about them and their family being able to stay in their house in case of a medical disability, mortgage disability insurance will pay the monthly mortgage for the disability period.
It is very important to understand which types of insurance your bank is talking about when you discuss mortgage insurance. Lenders may offer these types of life or disability policies, and even earn some income from them, but it is important to understand which kind of policy they are offering to you; if you have a low down paymentloan, you may not be getting the kind of protection you think you are.
Article Source: Articlelogy.com
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