Mortgage Insurance is a life insurance policy that usually lasts the term of your mortgage. Your home is usually your biggest investment and upon a tragedy it could become your biggest debt. Mortgage insurance is offered by both lending institutions and insurance companies; however the contracts that are provided by the lending institutions have numerous of restrictions. The following chart will explain some of the differences between the lending institutions and the insurance companies.
LENDING INSTITUTION
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INSURANCE COMPANY
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|---|---|---|
| 1 | You are insured under a group policy | You are insured under an individual life insurance policy |
| 2 | The lending institution is the beneficiary | You name a beneficiary of your choice |
| 3 | The lending institution owns the insurance contract | You are the owner of your mortgage insurance policy contract |
| 4 | The amount of insurance protection reduces as you make your mortgage payments | The insurance protection never decreases unless its at your request |
| 5 | The policy is subject to change of the insurance provider and the terms of the agreement | The insurance company cannot change the provisions or the premiums |
| 6 | The cost of insurance does not decrease even though the amount of protection does | amount of protection does If you decide to reduce your coverage, your payments will be reduced as well |
| 7 | No changes or alterations are permitted under the group plan | Any changes or conversions are permitted if requested in writing |
| 8 | The mortgage insurance protection will cease when the property is sold | property is sold The mortgage insurance protection will stay in force when the property is sold |
| 9 | The insurance protection cannot be transferred and is limited to the mortgage of the original property | This protection stays in place when you change homes and mortgage lenders |
Mortgage protection not only eliminates your family’s mortgage debt, but it also protects them from having to change their way of living at a time when they need comfort and stability the most.