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TERM LIFE INSURANCE ARTICLES

Term Life vs. Bank Life Insurance

Author: Ivon T. Hughes

The flexibility and affordability of term life insurance provides numerous advantages over lender-backed mortgage life insurance plans:

Control: with most policies offered by mortgage lenders, the lender is the owner and beneficiary of the plan. The death benefit goes directly to the lender to pay off the mortgage. With term life insurance, you are the owner and have full control over the choice of beneficiary. Upon death, the beneficiary can then make the choice over the best use of the death benefit.

Guaranteed Premiums and Death Benefit: with term life insurance, you will know exactly how much you will pay through the duration of the term, and are guaranteed a minimum $50,000 death benefit. There are no such premium guarantees with a lender-backed policy, and the death benefit is tied directly into the mortgage balance.

Portability of Term Life: it is common for homeowners to switch mortgage lenders based on who offers the best rates. With a lender-backed plan, the policy ends when the mortgage does, which means re-applying at an older age, leading to higher rates each time you switch lenders. With your own term life insurance, the policy and coverage stays in force no matter how many times you switch lenders. This allows you to concentrate on getting the best mortgage rate available without the worry of increasing insurance premiums.

Flexibility of Term Life: Your own term life insurance means you can lower the amount of coverage, change the owner or beneficiary to generallyhave full control over what happens to your life insurance.

   

 

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