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Lauren Said:

Best place to get life and critical illness insurance for a mortgage?

We Answered:

Mortgage protection life insurance has its place; it offers a degree of financial control after you pass. Sure, you can get a standard life insurance in the same amount as your mortgage, but who’s to say that’s what the money will be used for? Grieving family members do not always make the best investment decisions. And, unfortunately, disreputable financial advisors often try to take advantage of survivors. Mortgage protection life insurance guarantees that the insurance money will be used to protect your largest asset, your home. It guarantees that your family will have a roof over its head. It is also recession-proof. Many people think that if worse comes to worst, the family can always sell the home to retire debts or pay medical bills. As the housing slump is showing, this is not always the case. Even worse, the value of the home can plunge below the mortgage balance, creating “negative equity” in the home. Mortgage protection life insurance solves this problem, too. It will retire the mortgage, no matter what the home value is. The family will own the home, free and clear. They can then sell it at a reduced price and still realize a huge profit. Finally, policies can be written to include a terminal illness rider, paying off the home in the event that the policyholder is terminally ill. Rather than losing the house because you are no longer working due to terminal illness, you will be able to pay it off while you are still alive.