Often times we find that home owners who take out a mortgage on their homes end up buying mortgage insurance as well. What Mortgage insurance essentially does is insure your outstanding home loan with the bank as the beneficiary and in the event of your death squares off your mortgage loan by paying the bank whatever is outstanding on your loan. For many people it’s a matter of priority to ensure that their loved ones would not be burdened by their debts when they are gone. But choosing the right insurance vehicle is equally important for both the insured and their beneficiaries. 

Adam Ginsberg, the pioneer in eBay entrepreneurship and now a leading coach and mentor on online business and wealth building shares his views on whether or not is it a good idea to take out mortgage insurance.

As mentioned above, mortgage insurance comes into play upon the passing away of the insured, absolving his or her next of kin from repaying the mortgage loan. However, there are a few things worth looking into before signing on that dotted line.

More often than not, taking out mortgage insurance is not such a great idea. Here’s why. To begin with mortgage insurance is clearly not in your family’s favor as the insured amount will be paid directly to the loaning bank in the event of your death and your family will not see a dime of it. It is a good idea if you have taken out enough life insurance coverage to cover your family’s needs apart from the mortgage. For example, if you take out an additional term policy for the same amount of premium as you would have paid on the mortgage insurance then your family would’ve had the flexibility of taking care of more important expenses like other high interest loans  than the mortgage and continue to make mortgage payments as before.

Secondly, with mortgage insurance, the value of the policy decreases over time since it only covers the outstanding balance on your loan, whereas the premium remains the same throughout. On the other hand, a life insurance policy will pay your next of kin the same amount in the last year of its term as in the first.

Adam Ginsberg suggests weighing all your options and arming yourself with as much information as possible (read more here) before taking a mortgage insurance against your home loan.

To know more about Adam Ginsberg and his great new eBay software and entrepreneurship tools go here.
01/28/2014 4:19am

To me much better option mortgage insurance. So let's be safe

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