Option One – Buying through a life insurance company.
The policy is your own individual policy.
You own the policy – you have complete control over it.
You have a premium rate that is guaranteed in advance, the insurance company cannot decide to change it.
You may purchase any amount of coverage. You have flexibility to add the coverage to your insurance plan.
The insurance company cannot cancel your insurance, only you can (assuming you pay required premiums.)
Your individual policy is fully portable. It is not connected to the mortgage and if you re-finance your mortgage with another bank, you do not need to re-qualify.
You can convert this policy, regardless of your health.
You decide who your beneficiary is. Upon death your beneficiary will receive the proceeds and your beneficiary decides how and where to us those funds. The proceeds of a life policy are protected from all creditors, including a bank.
If you use a level term, and insure both the husband and wife individually (our receommendation) then both policies pay benefits in the event of both deaths (it is also more cost effective.)
You are buying the coverage from a licensed broker or agent who has many years of training to understand your overall need for life insurance and how to integrate that with your total need.
If you become terminally sick, and are laid off work, and are not able to make your mortgage payments, but you are able to make your insurance premium, your policy will pay the death claim.
Option Two – Buying through a Bank or Trust Company.
The coverage is under a group policy.
The bank owns the policy – you have no control over it.
The group policy premiums can be changed if the company decides to raise premiums for the group.
The coverage is for the outstanding amount of the debt. As your mortgage reduces, your insurance decreases. No Control.
The policy can be cancelled by the bank or by the issuing company.
The coverage will terminate if you re-finance your mortgage, or if you sell your house, or if you pay off your mortgage, or if the bank forecloses on your mortgage.
The group mortgage policy is not convertible.
The bank is your beneficiary and the death benefit is automatically used to pay off the mortgage, regardless of the wishes or circumstances of your dependents.
If you and your spouse are both insured on a bank mortgage policy, then only one payment is made in the event of both deaths.
You are buying insurance from a bank employee who is not licensed and who receives no training in your total need for life insurance.
If you become terminally sick, and are laid off work, and are not able to make your mortgage payments then you automatically lose your insurance along with your house at a time when you desperately need it to protect your family.