Mortgage Life Insurance - Rip-off Or Real Value?

Mortgage life insurance policies have been around for many years now. These no medical exams life insurance policies will pay off the mortgage balance on your home in the event of your death.

The rates on these life policies go down each year as your mortgage is also reduced. A mortgage life insurance policy allows you to know that your family will have a fully paid home in case something did happen to you.

With this said however, the question is, are these life policies worth having?

As with credit life insurance on your credit cards, mortgage life may not be a great value. In fact, many consumer advocate groups as well as some federal insurance regulators are all saying the exact same things.

The biggest beef that all of these groups and people have is that once your mortgage is paid for; you have nothing to show for all the premiums paid in. So, unless you die, or become terminally ill, you've spent all this money and have no life insurance.

How often do life insurance companies actually pay out the policy proceeds?

The NAIC says that mortgage life insurance lenders pay 40 cents for every dollar they collect in premiums. 40 cents is all. Compare that to the 90 cents that regular life insurance policies pay out. Needless to say, there is big money in the mortgage life insurance arena.

One positive note that I've found is that these are no medical exams life insurance policies. You'll never have to qualify medically. That's a real plus for those who could never get life insurance any other way.

So, is it for you? Well, if you have a current life policy that would cover your mortgage and provide additional money to your family, then most likely not. But for those who have no insurance, or can't qualify medically, then mortgage life insurance may be worth having.