Holly_Hobby
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:41 PM
Original message |
Mortgage death insurance, anyone? |
|
We've had our mortgage for 14 years, 6 more to go. We've had mortgage death insurance since inception. We have been paying $144.43 per quarter all that time. Today, we got a letter from Gencorp (GE), telling us that our quarterly payments will go up to $797.18 OR we can reduce our insurance to $20,000 to keep the quarterly payments at $144.43. WTF??? Anyone?
|
Roland99
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:42 PM
Response to Original message |
1. Does that build up value like a life insurance policy? |
|
I think I'd probably rather have a life insurance policy that something like that.
|
Sadie5
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:46 PM
Response to Reply #1 |
|
We only pay $122.30 per month. Get a regular life insurance policy if you can. $144 per qtr is pretty steep.
|
Holly_Hobby
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:50 PM
Response to Reply #5 |
10. We have regular, whole life insurance too n/t |
Holly_Hobby
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:49 PM
Response to Reply #1 |
8. Our mortgage is paid in full in the event one of us dies |
|
The value has always been $100,000. Let's say we owed $15,000 when one of us dies, they would pay off the mortgage and send the other one a check for $85,000. I'm not sure of the proper term for this kind of policy.
|
angstlessk
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:45 PM
Response to Original message |
2. Get decreasing term insurance to cover the value of your mortgage |
|
the cheapest insurnce you could purchase.
|
Holly_Hobby
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:51 PM
Response to Reply #2 |
11. Ok....a five year term policy would work for us - thanks n/t |
wuushew
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:45 PM
Response to Original message |
3. What is the balance left on the mortgage? |
|
If you don't mind me asking.
|
Holly_Hobby
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:52 PM
Response to Reply #3 |
|
I think we should take that $800/quarter payment and just make extra house payments!
|
Marie26
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:45 PM
Response to Original message |
4. It actually protects the bank |
|
"Does mortgage insurance make sense?" - http://money.cnn.com/2003/12/19/pf/expert/ask_expert/index.htm?postversion=2003121909Have you considered asking a financial advisor about this?
|
Holly_Hobby
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:55 PM
Response to Reply #4 |
15. We did, when we bought our house |
|
She said "the man is usually the one who dies", and he's the major breadwinner. She said it would enable me to keep the house if he died.
|
Marie26
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 05:02 PM
Response to Reply #15 |
|
I would consult a second, independent, opinion now. A lot of these insurance plans are scams, and there are ways to opt out of them. But please don't take people's advice on a discussion board (including mine!) w/o speaking to an expert.
|
Swede
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:46 PM
Response to Original message |
6. Can't you just get a term policy |
|
and bequeath part of the death benifit to your estate? That way the bank will get it's money.
|
Holly_Hobby
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:55 PM
Response to Reply #6 |
16. Excellent idea, thanks! n/t |
sharp_stick
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:47 PM
Response to Original message |
7. I'd look for other forms of insurance |
|
It looks like they want you to pay a lot more for a policy that will pay out a lot less than when it started. Unless there are some detrimental health issues it might make more sense to look around for a different kind of policy. Maybe term life, but I'm not familiar with the offerings.
Good luck.
|
EvolveOrConvolve
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:50 PM
Response to Original message |
9. Mortgage Death Insurance is usually not worthwhile |
|
A term life insurance policy would have been better.
The $144.43 you've invested per quarter over 14 years would have added up to almost $17,000 dollars if you had invested it rather than paying for the insurance policy. I'm not sure what the balance is on your mortgage, but your house might be paid off if you'd invested wisely then paid off the mortgage.
|
Holly_Hobby
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:57 PM
Response to Reply #9 |
18. We had no advice when we bought a house, so |
|
we hired a financial planner to help. We were obviously given bad advice. Thanks.
|
EvolveOrConvolve
(1000+ posts)
Send PM |
Profile |
Ignore
|
Tue Dec-19-06 09:42 AM
Response to Reply #18 |
25. It wasn't necessarily bad advice |
|
Edited on Tue Dec-19-06 09:43 AM by EvolveOrConvolve
It was just far more conservative than I would have gone for. For example, if you had invested the mortgage insurance rather than paying it the the insurance company, you would be able to pay off your house now, and could be even further ahead in 6 years. If your mortgage payment is $500 per month, and if you had invested that money at an average 8% return, you would have almost $50,000 more in your bank account in six years than you do now.
|
NewJeffCT
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:52 PM
Response to Original message |
12. Are you required to have Mortgage Insurance? |
|
If not, then dump it altogether.
If you think you or spouse could not make your house payments if one of you passed away, then get regular term insurance, as it is probably much more affordable.
|
Holly_Hobby
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:58 PM
Response to Reply #12 |
19. No, it's not required |
|
We wanted to be able to keep the house if one of us died. I can see the mistake we made. Thanks for your reply.
|
On the Road
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 05:21 PM
Response to Reply #12 |
24. This Sounds Different from PMI (which protects the lender) |
|
Edited on Mon Dec-18-06 05:23 PM by ribofunk
Mortgage death insurance might be a good option in this situation. It would depend on the premiums and the need for coverage.
If one partner dies, the other might be able to move, or want to move. In that case, the only money needed would be to cover expenses until the actual sale of the house. If there's positive equity, that could be done via a home equity line of credit (which could even be applied for now).
If the remaining partner wants to remain in the house without sufficient income, mortgage death insurance would cover that. Although as the other poster pointed out, the premiums could have been used to pay off $17,000 of equity.
On Edit: Personally, I don't like to buy a lot of insurance, and would rather put that money into savings. I just want to clarify the distinction between PMI, which protects the lender, and mortgage death insurance, which protects the policyholder.
|
napi21
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:54 PM
Response to Original message |
14. Mortgage death insurance has always been a scam. |
|
I recall back in 1964 when we bought our first house, we were told it was much betterand much cheaper to buy term life insurance in the amount equal to the mortgage and for the same approximate term. It will do the same thing, and cost less than 1/4 of what they wanted for mortgage ins.
|
bluerum
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 04:56 PM
Response to Original message |
17. You don't need it. Sometimes banks require it when you first take |
|
out a mortgage depending on your down payment etc.
At this point, if you have life insurance to protect your surviving family, or they can carry the mortgage on their own, dump it ASAP.
|
Holly_Hobby
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 05:00 PM
Response to Reply #17 |
20. Yes, we have whole life policies too |
|
If I died, my husband can afford the rest of the payments. If he dies, I certainly cannot afford it on my own, but I've changed my mind about wanting to stay here, so it's a moot point. I would sell, even though his whole life policy would pay the remaining payments.
|
Swede
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 05:07 PM
Response to Reply #20 |
|
Wholelife will give you the face value but not the cash value,so the money you saved up will be kept by the insurance company. Watch Suze Orman Show,she hates wholelife and universal and will tell you why. Here's a link. http://www.suzeorman.com/Here is her advice to Oprah. http://www.oprah.com/omagazine/200308/omag_200308_suze.jhtml
|
flamin lib
(1000+ posts)
Send PM |
Profile |
Ignore
|
Mon Dec-18-06 05:14 PM
Response to Original message |
23. This is known as Credit Life Insurance. IMO it is a poor way to |
|
cover the contingency of the loss of a breadwinner. As so many have suggested it is almost always better to get an inexpensive term life insurance policy.
You mentioned that you have whole life insurance. If you've had it long enough you may be able to use the cash value increase to pay the premiums. In a sense you will have the policy for free. Use the money you were paying into premiums to pick up some term life or invest it in your 401K.
Talk to your agent and see if it's possible to use the cash value increase to pay for the insurance.
|
DU
AdBot (1000+ posts) |
Sat May 11th 2024, 09:18 AM
Response to Original message |