There was a recent article on Business Week Online with the above title. Unlike a lot of articles I see about insurance there was a lot to agree with here. There were two key areas that concern the area of life insurance.
First: Mortgage insurance or mortgage life insurance. From the article: “Mortgage Insurance Many new home owners will receive an offer for mortgage insurance right after the ink dries on the closing papers. The offers say a certain loan amount will be protected “in case of an unexpected tragedy.” It’s essentially a life insurance policy that pays the mortgage if you die. So the value of the insurance itself could go down as your mortgage is paid off…….”
My comments: First of all it’s a good idea to have life insurance to insure against your debts and obligations and for most people their mortgage is their largest debt. The problem with “mortgage life insurance” as is described in the article is that it reduces in benefit as the mortgage goes down. Today if you want a 20 or 30 year term life insurance policy you can get a level benefit, without decreases, usually at a lower price than the mortgage life insurance.
The second area to comment on is credit life insurance. Here’s what the article said: “Credit Life and Disability: When you buy or lease a car, the dealership will try to sell you this needless policy to make a few extra bucks. Again, this is basically a life insurance policy that will pay off your monthly car loan if you die or become disabled. “Credit insurance is a rip off……..”
My comments: Again, this is correct. Get your life insurance at low cost in your own policy. These credit life policies are very high priced. One possible exception is if you’re completely uninsurable because of medical history and the credit life is issued without any medical questions on a guaranteed basis, then you might consider it.
In most cases, by going to an online life insurance quotes site you can search the market for term life insurance on your own and get quotes right there. On the lifeinsure.com site this process is also anonymous until (or if) you decide to purchase.