I would like to have some insurance to pay off our home when I die so that my wife doesn't have to give it up and move out on the street.
Total Comments: 15
Posted: Wed Sep 16, 2009 05:12 am Post Subject:
Yes, they are simply decreasing term policies that are added when the loan is written.They are usually expensive so it would be better just to get a level term policy to cover the debt.Example:you have a 20 year mortgage, you take the bank's insurance, you owe 10 more years ,when you die, the policy would pay the house off.If it were a 20 year level it would pay the full original face amt. But if you are in bad health you should get the banks ins. This is what I suggest to my clients.
Posted: Wed Sep 16, 2009 05:48 am Post Subject:
But if you are in bad health you should get the banks ins.
Are you sure it's as much easy to get this bank insurance as that of any other insurance carrier policy?
He'd need to be absolutely sure that there are no hidden challenges (inexplicable clauses) that his wife would meet in the future. Pinkfloydfan
Posted: Thu Oct 29, 2009 03:47 am Post Subject:
Hi..
Your thought is appreciable my friend, I believe Insurance is a tool to safeguard individuals and their families from unfortunate losses that happen in the family.
Good luck..!
Posted: Mon Nov 16, 2009 12:19 am Post Subject:
A standard Life Insurance policy should take care of this quickly and easily. you can pick one up from any number of places, and they are among the cheapest types of cover you can get.
You can also get cover which is designed to pay directly to the lender rather than to your estate and only in the amount of your current mortgage . this can work out a little cheaper, but to be honest, you're probably better off with standard life insurance.
Posted: Wed Dec 09, 2009 12:53 pm Post Subject:
Contrary to the discussions, you don't get "credit life" to cover a mortgage. You get decreasing term or some other form of life insurance. And with that you may name your own beneficiary who decides what to do with the money. Maybe they hate the house and would prefer to take the money and walk away.
Credit life, by definition, is issued under a group policy to a lender -- as in a car loan, credit cards, other consumer loans -- and the lender is the beneficiary. In California, by law "credit life" policies cannot provide more than $100,000 of protection, and obviously not more than the actual debt. Credit life insurance is usually paid for with a single premium added to the loan amount, and financed within the primary debt. Because the premium is paid in full up front, the lender is assured of never losing on their loan.
But the larger consideration is what happens after the mortgage is paid off? How will property taxes, food, clothes, utilities, repairs, or other necessities of life be paid for? That's one of the arguments against decreasing term as the sole form of insurance in a household.
A combination of decreasing term to cover the mortgage and term or cash value insurance to cover the other needs is a better recommendation.
And PMI doesn't "pay off a mortgage" if the borrower defaults, as has been suggested, it pays the difference between what the borrower owed and what the lender sells the property for, if they cannot sell it at or above the remaining unpaid loan and interest amounts. Borrower defaults on a loan with $300,000 principal. Lender sells the home for $275,000. Assuming no interest or fees attached (highly unlikely), the claim to the PMI provider is for $25,000, not $300,000.
The rip in PMI is that the borrower pays the cost of protecting the lender's losses. Particularly onerous in those subprime predatory lending situations that have come back to haunt us these last 2-3 years, and ruined the values of the rest of our homes.
Posted: Wed Sep 16, 2009 05:12 am Post Subject:
Yes, they are simply decreasing term policies that are added when the loan is written.They are usually expensive so it would be better just to get a level term policy to cover the debt.Example:you have a 20 year mortgage, you take the bank's insurance, you owe 10 more years ,when you die, the policy would pay the house off.If it were a 20 year level it would pay the full original face amt. But if you are in bad health you should get the banks ins. This is what I suggest to my clients.
Posted: Wed Sep 16, 2009 05:48 am Post Subject:
But if you are in bad health you should get the banks ins.
Are you sure it's as much easy to get this bank insurance as that of any other insurance carrier policy?
He'd need to be absolutely sure that there are no hidden challenges (inexplicable clauses) that his wife would meet in the future. Pinkfloydfan
Posted: Thu Oct 29, 2009 03:47 am Post Subject:
Hi..
Your thought is appreciable my friend, I believe Insurance is a tool to safeguard individuals and their families from unfortunate losses that happen in the family.
Good luck..!
Posted: Mon Nov 16, 2009 12:19 am Post Subject:
A standard Life Insurance policy should take care of this quickly and easily. you can pick one up from any number of places, and they are among the cheapest types of cover you can get.
You can also get cover which is designed to pay directly to the lender rather than to your estate and only in the amount of your current mortgage . this can work out a little cheaper, but to be honest, you're probably better off with standard life insurance.
Posted: Wed Dec 09, 2009 12:53 pm Post Subject:
Contrary to the discussions, you don't get "credit life" to cover a mortgage. You get decreasing term or some other form of life insurance. And with that you may name your own beneficiary who decides what to do with the money. Maybe they hate the house and would prefer to take the money and walk away.
Credit life, by definition, is issued under a group policy to a lender -- as in a car loan, credit cards, other consumer loans -- and the lender is the beneficiary. In California, by law "credit life" policies cannot provide more than $100,000 of protection, and obviously not more than the actual debt. Credit life insurance is usually paid for with a single premium added to the loan amount, and financed within the primary debt. Because the premium is paid in full up front, the lender is assured of never losing on their loan.
But the larger consideration is what happens after the mortgage is paid off? How will property taxes, food, clothes, utilities, repairs, or other necessities of life be paid for? That's one of the arguments against decreasing term as the sole form of insurance in a household.
A combination of decreasing term to cover the mortgage and term or cash value insurance to cover the other needs is a better recommendation.
And PMI doesn't "pay off a mortgage" if the borrower defaults, as has been suggested, it pays the difference between what the borrower owed and what the lender sells the property for, if they cannot sell it at or above the remaining unpaid loan and interest amounts. Borrower defaults on a loan with $300,000 principal. Lender sells the home for $275,000. Assuming no interest or fees attached (highly unlikely), the claim to the PMI provider is for $25,000, not $300,000.
The rip in PMI is that the borrower pays the cost of protecting the lender's losses. Particularly onerous in those subprime predatory lending situations that have come back to haunt us these last 2-3 years, and ruined the values of the rest of our homes.
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