How to Shop for the Best Mortgage Insurance
- 1). Avoid responding to unsolicited ads or mortgage protection insurance offers from your lender. During the months following your home purchase, you will receive numerous postcards and letters from agents who want to sell you a mortgage life policy. Although these agents may want to protect you and your family, they also count on getting you to make an "impulse purchase" based on fear. This means that you may end up purchasing a policy without finding out if you are getting the best coverage or the lowest price.
- 2). Contact a reputable life insurance broker in your area. A broker will have access to plans and rates from several different companies, and can help you review policies and prices to find the best coverage for you. A broker will explain how each policy will pay out if you die, and if it will pay a percentage of the face value if you become disabled. Since a broker will do most of the legwork for you, you can free up valuable hours to attend to other tasks.
- 3). Shop online for mortgage life insurance quotes. This process can be a bit more cumbersome than using a broker, but some online insurance companies can offer lower rates. If you choose to use this method, make sure you study policy coverages and conditions carefully before making a purchase--a cheap mortgage policy won't protect you if it is laden with exclusions and restrictions.
- 4). Ask about each policy's face value. Specifically, find out if the face value (the amount the policy will pay out if you die) decreases over time, or if it remains constant throughout the policy term. You should also ask if any payout for disability will decrease over time. A level face value policy may be a bit more expensive than a decreasing policy in the beginning, but with a decreasing policy, you pay the same premium for less coverage each year the policy is in force.
- 5). Find out about early termination fees and policy convertibility. If you move in five years, you want to know that you can roll over your mortgage life policy into a replacement policy to cover your new home. Ideally, your policy should allow you to do this without termination fees or other charges.
