Mortgage Protection Term Life Insurance

Life Insurance Plans Richmond Virginia

Term Life Insurance Mortgage Policy Advantages vs Private Mortgage Insurance Policy

What is Private Mortgage Insurance (PMI)

Private Mortgage Insurance (PMI) is an insurance policy that pays off your mortgage when you die. The PMI insurance company will send a check directly to your mortgage company to pay off your mortgage. By law in Virginia you’re required to get private mortgage insurance (PMI) if you don’t put down more than 20 percent when you purchase your home. PMI benefit payments are made directly to the mortgage company instead of your family, which benefits the mortgage company more than your family.

How Term Life Insurance Policies for Mortgage Protection Benefit Families Compared to PMI

 Term life insurance is most often cheaper compared to purchasing PMI offered by the mortgage companies. There are several benefits for buying term life insurance compared to PMI. You can purchase a large enough term life policy to cover your mortgage, replace your income and provide your family with a tax free cash benefit. You receive a fixed benefit cash payout with a traditional term life policy that you control. You’re better off buying a 20 or 30 year level term life insurance do to the flexible features in most policies today. Example: If you purchase a 30 year $800,000 term life policy and after 10 ten years you decided to lower the face amount, because you have paid down your loan most companies will allow you to reduce the face amount. You control the policy benefits rather than the PMI mortgage policy that automatically reduces the benefit without lowing the premiums. The term life insurance allows you to name beneficiaries and control the rights of the policy. Your family can decide to use the benefit to pay off the mortgage or continue to make payments. Your family will control the benefits instead of the mortgage company.

Private Mortgage Insurance (PMI) Disadvantages

PMI policies have decreasing benefits, because the payout is generally fixed to the mortgage principal amount. The PMI policy premium remains level for the life of your loan even though the benefit amount is decreasing as you pay down the loan. It’s important fact know that your family will not any control of the money from the PMI policy. PMI is expensive for the amount of coverage and premiums paid. You receive much less coverage with PMI compared to a term life insurance policy. PMI will benefit you if have health conditions that make it impossible to purchase a traditional term life insurance policy.



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