Reason #1 not to buy insurance from the Bank? It is EXPENSIVE!
...a couple age 36 need $400,000 of insurance
Our Term Insurance Rates around $1000/year. Bank Mortgage Insurance Rate : $1920/year
That is 92% more expensive!
But the cost differential is only the tip of the iceberg. Here are more reasons:
Term Insurance pays YOUR beneficiary. Mortgage Insurance pays the Bank.
Term insurance costs & benefits are guaranteed for the life of the policy.
Fees for bank mortgage insurance can be changed at random.
As your mortgage reduces
SO does your bank insurance coverage
but NOT your cost.
Term insurance is fully portable if you move your mortgage.
Bank mortgage insurance is not
You lose your mortgage insurance coverage when your mortgage is re-paid, assumed or in default.
As long as your term life insurance premiums are paid you can convert your insurance to a permanent plan
or keep it until it expires and it WILL pay if death occurs.
If you buy term insurance the cost based on your health at the time the policy is purchased.
You KNOW your claim will be paid out per your contract terms.
Mortgage insurance is subject to post-claim underwriting which means
technically you could be declared uninsurable when you submit a claim
and your beneficiaries may NOT be PAID.
This is scary - and it happens regularly.