Many first-time home buyers are likely to get mortgage insurance, in the event of an untimely death. But is mortgage insurance right for you.
If you purchased mortgage insurance, your mortgage would be paid off at time of death. If you had been paying $60.00 in premiums for the last 15 years and only owed $20,000, that amount would then be paid off. Where does that leave your loved ones? Sure the house may be paid-off but would they have enough money for upkeep, utilities, taxes, etc… Even though your mortgage debt reduces over-time, your premiums remain level.
A life insurance policy for a term or permanent insurance would cover more than your mortgage. If you had a $250,000 policy, your premiums would remain constant and so would the face value. Once you die, the death benefit is paid to your beneficiary who can use it as they see fit. If you ever switched your mortgage, you can keep your existing insurance as there would be no need to re-qualify.
So I ask, who really benefits from mortgage insurance?