10 Questions to ask when insuring your home mortgage

The typical method. Homeowners with a mortgage, and the associated debt, often carry life insurance that was purchased when signing their mortgage papers. The lending institution sells creditor insurance to ensure that the indebtedness would be paid off upon death of the debtor.

Here are several questions for you to ask if you consider buying mortgage life insurance through a lending institution.

1. Are you limiting your life insurance coverage? The lending institution’s life insurance amount is generally limited to the amount left owing on the mortgage as it is paid through its amortization period. Conversely, most people, if healthy, can purchase up to fifteen times their income––usually an amount well over home mortgage debt. For this reason it may be wiser to just increase the coverage on an existing life insurance plan you may own; or purchase your own higher coverage directly from a life insurance company. This can also cover increasing debt resulting from fluctuating lines of credit, credit cards, or home renovation loans.

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