Don’t Buy Mortgage Protection Insurance

If you are contemplating purchasing life insurance you may have heard the term mortgage protection life insurance and thought that it sounded like a pretty attractive concept. The idea that, should you pass away, your beneficiaries will be protected financially by having their mortgage paid off entirely sounds attractive on the face of it. After all, the mortgage is probably the biggest single monthly expense your family has. But did you know that most financial planners do not recommend this kind of life insurance?

If you look at the range of expenses your loved ones will have, the mortgage is simply part of the entire picture. If you take a large part of the money that you have available to pay for premiums each month and put it towards one single expense, will you be neglecting the rest of their expenses? Mortgage protection life insurance takes control away from the beneficiaries.

What if your family decides to sell the family home? It doesn’t make much sense to pay off a mortgage for a home that will be immediately resold, unless you are the mortgage lender, in which case you’ll be quite happy. But as the person buying the policy that is hardly your goal, is it? Again, a holistic approach to all of your family’s monthly expenses is probably the right way to go.

So what are the alternatives? If you simply buy as much good term life coverage as you can afford, you’re probably doing the best thing by your loved ones. Leaving open the question of where exactly the insurance payoff amount will go not only provides financial support it also allows them to determine for themselves when they will have a better idea of what they will do after this major disruption to their lives.

A good guide to life insurance basics can help to educate you on basic insurance concepts, and consulting financially savvy relatives is also a great source of information. Be sure and get some unbiased information before you commit to a life insurance policy into which you will be paying for decades.

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