The following is important to know about Mortgage Protection Insurance

There are two types of Mortgage Protection Insurance: The first is provided by institutional lenders (Banks). The second is home mortgage insurance provided through a third party not affiliated with the lender and called Mortgage Protection Plan. Both designed to pay Bank upon death of the insured.

The first is offered when you apply for mortgage and very easy to obtain. Premium is paid with monthly mortgage payments. It's a group policy where everyone limped in the same category, sometimes smokers and non smokers together. Premiums often don't reflect health conditions correctly.

Also, this type of insurance is post underwritten. It means you answer three health related questions to qualify. No health exam required. May seem great at first. However, if the insured dies, the insurance company will underwrite the applicant. They will review the answers provided and will match to the past medical records to ensure that the answers were correct. If they were not, squeezing water from the stone will be easier then collecting coverage.

If you decide to refinance and switch lender, you will have to re-apply with the new Bank. Usually, that results in higher payments due to increased age or changes in health conditions. Many people don't review the coverage provided by this mortgage protection insurance and don't know that the insured amount declines with every mortgage payment but premiums remain constant.

At the end of the day, there is only one beneficiary, Bank, regardless of your family financial needs.

Mortgage Protection Plan

Mentioned earlier Mortgage Protection Plan is offered by mortgage brokers only and slightly better. It may include disability and critical illness coverage. It is also portable, so you can take it from one bank to another without re-qualifying each time. Usually you can get 60 days refund if the policy is cancelled.

In any case, we don't recommend either one of these plans. Proper life or disability insurance is the better way to protect your family at all times.

Follow this link to read more about Mortgage Protection Insurance