mortgage protection insurance (again)

behaviorkelton

20 years ago

I've seen people talking about this issue, but I can't find any reference to how much this stuff costs.

So how much would it cost to, say, insure a $100,000 mortgage.

I'm talking about the type of insurance that will pay your mortgage payment if you should lose the ability to work.

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Comments (9)

Chemocurl zn5b/6a Indiana
20 years ago
I would think that there would be a lot of factors considered in determining the cost of insurance...age for one.

Is there only one name on the mortgage?

I wonder how that would work if there were 2 names (and most probably 2 incomes), on the mortgage.

I think it is a considerable amount of the payment, and I never had it, but instead was comfortable with having savings, in the event of a major illness or injury.

Sue
western_pa_luann
20 years ago
We just took out a regular insurance policy in my husband's name (I am a SAHM) for the balance of the mortgage (after our down payment). WAY cheaper....
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If your mortgage owing at present is, say, $100,000. you owe that amount right now. In a couple of years, as your mortgage payments are for equal amounts over a period of years, you'll owe almost as much, for most of your payment is being used to cover the interest cost. After about ten years, the amount left owing on your mortgage is somewhat less, so less interest is needed to cover that amount, and a much larger portion of your regular payment goes toward paying off principal. Which is a good reason to make additional payments as permitted, especially in the early years of the mortgage, for the whole amount of the extra payment goes toward paying down principal and may be almost as much as the total amount of the principal that had been paid off by your mortgage payments through that whole year. During the later years of your mortgage, as the principal is smaller, much, eventually most of your regular payment goes toward paying down the principal. At that time, the remaining principal is rather small, and that is the total amount of insurance that the insurance company will pay if your spouse dies. But the amount of annual premium almost always remains constant. Many advisors say that it's best to skip the mortgage insurance, on which premiums are often rather high, and just go for regular insurance. That way, as the remaining amount owing on the principal decreases, the amount of insurance carried remains the same, so there'll be some extra left for you to use for other purposes. In many cases, I think that you'll find that buying a larger amount of term insurance (which mortgage insurance is) may not be more costly than purchasing mortgage insurance. As a matter of fact, most families when they are young need quite a bit of insurance, to provide for not only paying off the balance owing on the house mortgage, but to provide for the ongoing living needs of the bereaved over a number of years, possibly including part of the cost of university, etc. (at higher rates than currently, allowing for inflation). As the years go by, there are fewer years to care for the chidren until they are educated and independent and fewer years to care for the surviving parent, so decreasing face value of term insurance is often a wise choice - but for a much larger original amount than solely to cover house mortgage retirement. Good wishes as you make your decision. ole joyful
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steve_o
20 years ago
A properly-valued life insurance policy will function in part as your mortgage-replacement insurance, your credit-card insurance, your installment-debt insurance, etc.

However, most life insurance policies do not cover disability, which is a far more likely occurrence over your career than death. If you cannot work at your job, what could you do which would earn you enough money to continue to pay your bills? Some workplaces offer disability insurance, either paid for by the company (rarer and rarer) or as a group policy for its employees. The thing to watch for there is "own occupation" -- cheaper disability-insurance policies will only pay you for your disability if you are unable to perform any job (even filling boxes on an assembly line or stuffing erasers on pencils) -- regardless of whether the income that new job provides remotely resembles your old income. In that case, you probably qualify for SSDI anyway. So, if you go for disability insurance, make sure it covers your income for the kinds of jobs you have been educated to do.
Karen_sl
20 years ago
And, here is something you all should consider....getting this insurance from your insurance agent not the lender.
When you get the insurance from the lender they always get the money.
If you get insurance from an agent you are the beneficiary.
An example..
Mortgage life thru the bank..
Mr. bread winner dies, mortgage paid off. No extra money for spouse.
Mortgage life with insurance agent...
Mr. bread winner dies, spouse gets the money...she may continiue to pay payments and if necessary have $$ for repairs.
I sold insurance for years and saw a person in great trouble because had life insurance with mortgage company. When her spouse died, the house was paid for...wonderful. She needed a furnace and a roof but had no $$ for that. With the life with her insurance co, she could have made these payments and her repairs while she got on her feet enough to get a job and continue.
And, do you all know that most times the insurance is cheaper thru an agent as opposed to the bank??
Ok, sorry, that was my 2 cents!!
Karen L
devorah
20 years ago
Karen nailed it. If you aren't required to buy mortgage insurance, don't do it. Get term life insurance instead.
behaviorkelton
Original Author
20 years ago
OK... so what can a 41 yr old healthy guy expect to pay for term life insurance.
Or is there somewhere I can get a free quote without having to interact with a "come on" sort of marketing?
steve_o
20 years ago
You probably can find some prices for companies which do business over the Internet, though you'll likely have to supply them with an email address (make it a disposable one). Or you can call an independent broker in your community; at least he/she is not representing just one line. Or just get really good at saying, "No, thank you."
kudzu9
19 years ago
grace101-
I see you just joined these forums. If you didn't read the policies before you joined, you need to know that these forums prohibit commercial solicitations, such as you've just made, and that your membership can be cancelled for violating that policy.
joyfulguy
19 years ago
If the lender furnishes the insurance, the benefit goes to them: if the homeowner buys it, he (well, his survivors - he'll not have much need of it, where he goes) gets the benefit, as mentioned above.

A problem with mortgage insurance, though, is that the amount of insurance is the amount of the principal still owing - that decreases over the years, more rapidly near the end.

However, if you buy your own term insurance, usually you'll get a larger amount for the same premium, but the amount of benefit will stay constant throughout the full term.

If you arrange to delay death for a period, there'll be some extra benefit over the amount needed to pay off the mortgage that the survivor can use for other purposes.

It is worthy of consideration that most of us are about 4 times as likely to suffer disability as death during our working years.

ole joyful

mortgage protection insurance (again)

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Chemocurl zn5b/6a Indiana

western_pa_luann

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mortgage protection insurance (again)

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