Loans Answers

life insurance

Question: Where I live you can’t get a mortgage without life insurance. When the mortgage holder dies the debt is paid in full.

Not true where I live, meaning you *can* get a mortgage without it. This is called credit life insurance, btw. They tried to sell us this when we closed on our mortgage, but we didn’t buy it, because it was a rip-off (premium-wise). We didn’t have life insurance, either, at the time. What the bank had to rely on was our income, credit history, and the value of the property itself.

Answer: Yeah, I was surprised to hear about a mortgage holder being required to buy credit life insurance, although maybe that actually only applies to people with less than a certain amount of down payment.

However, for people who don’t otherwise feel they need life insurance (couples with two incomes and no children, for example) some kind of policy that pays off the mortgage in the event of death of the spouse can be a good idea. DH and I had one years ago, it wasn’t that expensive, and it gave me a lot of peace of mind. I couldn’t have made the mortgage payments on my income alone but probably would have wanted to keep the house. We bought ours through an agent we were acquainted with, though, not some no-name company that solicited us.

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