Mortgage
Insurance Frequent Questions:
Q: I Think I'm already
paying for this coverage, How do I know for sure if I'm covered?
A: The best way
to be sure, is to review your policy carefully. If you still are not
sure of your coverage, ask your Life insurance Agent to review it
with you. If you never received a policy, or lost your policy,
make sure you request a duplicate, Review it carefully and keep it
in a safe place.
Often home owners
mistakenly believe their Homeowners insurance affords this
protection. Or that the premiums they are paying for PMI affords
this protection.
Q: What is Private
Mortgage Insurance?
Don't Mistake PMI for
Mortgage Insurance. The terms are very similar, but actually insure
to completely different things.
PMI on your loan
is Private
Mortgage Insurance
to indemnify your Lender should you fail to make your mortgage
payments as agreed. PMI helps you into home ownership with little,
or no money down. It is usually required by your lender if the
loan on your home will exceed 80% of the appraised value. It does
not prevent the loss of your home from foreclosure and does not pay
off your mortgage in the event of your death
Government Home Guaranty
services like
VA Loan programs, or FHA
loan
programs are also "insurance" programs that help you into
home ownership with little, or no money down. They do not protect
against the loss of the home when the loan cannot be repaid because
of the death, or disability of the homeowner.
Don't mistake
accident only coverage for "Mortgage Insurance". If you applied
by mail, you most likely have bought an accident (only) mortgage
protection. This type of coverage does not pay off your mortgage in
the event of death by natural causes, like Cancer, Heart Disease,
Diabetes, Kidney failure, Stroke, Aids, etc. Coverage for death by
natural causes would require a life insurance application in which
you were asked to answer health questions, usually witnessed by a
licensed life insurance agent, or Paramedical nurse
Q: Which coverage is
more important to maintain, Home Owners Insurance, or Mortgage
Insurance?
A: It is very
important that you maintain both of these types of coverage.
Homeowners insurance
protects you and your lender, against the financial cost of
repairing, or replacing your home, when the physical damage is
caused by Fire, Windstorm, Hail, Vandalism, etc.
Your lender requires
proof that you have this type of insurance coverage on your home
before they will make you a home loan and requires that you maintain
this coverage until you have repaid the loan,
Mortgage Insurance,
also known as Mortgage Cancellation Life Insurance, Mortgage
protection life insurance, or Home Loan Insurance, can protect your
family against the possible Loss of their home through foreclosure,
or a forced Sale when one, or both of the homeowners dies before
repaying the home loan.
Without Mortgage
Insurance, often the surviving spouse does not have the income to
repay the loan.
Because mortgage loans
are usually for a specific (term) or duration, (ie.15 years, 20
years, or 30 years.) a renewable Term life insurance policy is often
used for Mortgage protection because it requires less premium than
an interest sensitive whole life insurance, or universal life
insurance policy. Some homeowners prefer to pay the higher premium
because of the potential cash value in an interest sensitive whole
life, or universal life policy. A less expensive alternative may be
to add a guaranteed return of premium cash value rider to your
mortgage term policy. Regardless of your preference, obtaining some
type of mortgage insurance protection is very important.
Statistical information
obtained from *Mortgage Bankers Quarterly, revealed that up to 70%
of all foreclosures in the United states, and up to 85% of all
forced sales were the direct result of the death, or disability of
an uninsured, or underinsured homeowner.
Q: What are the
chances of losing my home by
Fire?
A:
one out of100.
Q: What are the
chances that I won't live long enough to repay my mortgage?
A: The
statistical risk of dying depends on your age at the time you
obtained your mortgage. Statistical information obtained from *NAIC
Commissioners Standard Ordinary Mortality Tables reveal that the
chances of death before completing a 30 year mortgage are:
Age 50: Almost Certain
Age 40: one out of 2
Age 30: one out of
4 y Life Insurance
Family Life Insurance Family Life insurance
Policy Family Life Insurance Rider
