People often see their homes as their biggest investment, and naturally they want to protect that investment. On the other hand, people also worry about what would happen to their loved ones if they were no longer around to care for them. For both of these situations, there is life insurance and mortgage insurance. Both types of insurance offer benefits, but they differ in their nature and eligibility criteria. If you are considering one or both forms of insurance, here are some things that you need to be aware of before making a decision.
Life Insurance
Life insurance is a smart move for many people who have dependents. However, life insurance does not often come without a rigorous application process. Age is a critical factor in the monthly premium you pay and you often have to undergo a medical exam. If you have had any previous complications, then that could work against you. In short, the younger and healthier you are, the better your chances of getting a good premium. However, for those who don’t qualify for life insurance but still want to protect their assets, they have to look at other options.
Mortgage Insurance
Mortgage insurance is usually offered by the same lender providing you with the mortgage. This form of insurance covers your monthly mortgage payments in case you can‘t pay them with your regular income. While mortgage insurance is much easier to secure than life insurance, there is a higher cost. Also, while the premiums don’t change as time goes by, the benefits are reduced as you pay down your mortgage. If you have trouble qualifying for life insurance but still want some form of protection, then mortgage insurance might be a more practical option. However, if you change your lender, your policy will also change.
Which Is Better?
Choosing between mortgage insurance and life insurance depends on your situation. If you know that you may not qualify for life insurance then mortgage insurance may be the next best thing. That said, there are many life insurance plans that offer flexibility and require little medical examination (often just a short questionnaire). So it is best to fully explore your options.
At Northwood Mortgage, our agents can help you find the best solution for your needs. Contact us today for a free consultation and let us see how we can help you protect your assets and your loved ones.
