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Do I need to buy Mortgage Life Insurance Protection?

On the 7th working day (9 total days) after closing I get a letter in the mail.  It says:

Important Information to: misspelled-four-letter-first-name Last-Name
Loan Amount: $154,321 (actually this is 80% first the 1st lien of a tandem loan - 80 - 15 - 5 % conventional loan 5 % down)

My Lender Name
"You are entitled to participant in our low cost Mortgage Life Insurance Protection Program, which can protect your $154,321 loan in case of an unexpected tragedy. *Without a plan your family would still have to make the monthly mortgage payment.*
Benefits Your Personalized Plan Can Include:
Death - ...
Disability - ...
Critical Illness - ...
Waiver of Premium - ...
Unemployment - ...
Level Premium - ...
Return of Premium - ...

Asks For: DoB, Tobacco User, Height, Weight, Phone, Time-2-Call, etc.

All information is from public records and mailed by ... LLC."


Is this nice or important to have?  Based on what points I can decide if it right for me (cost, …)?

Do I need to buy Mortgage Life Insurance Protection?
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June 12 2009 - North Austin
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Replies (8)

Mortgage life insurance is just that, a policy generally for a set period of time (Term Policy) to cover the mortgage in the event of an unexpected or premature death of the homeowner. Yes it is nice to have and needed too, if you have a life insurance policy that will cover the entire mortgage balance upon your death then you might be ok, but then what? You may need additional death benefit to leave for your significant other or dependents. Talk to your local agent or call me for more info.
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July 12 2009
Profile picture for mysql
The letter you got was spam. Anytime you refinance, get a new mortgage, etc. The information is publically available and you will end up with a horde of spam in the mail. Typically they will list your lender in the papers to make it look official. 

Personally, I avoid any company that has to sink to spamming people to get business.
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July 12 2009
Profile picture for smile 4 u
I do not  recommend it, except if you are in bad health. Why? several reasons: 1. WHile you pay for it, the bank benefits. Mortgage life pays off the mortgage, it does not pay the beneficiaries (spouse, kids etc). Often, in the event of a death, paying off the mortgage may not be the best financial option. Of course, it is nice to have the mortgage paid off, but it does not leave you with the option.  2., the amount of insurance purchased is usually limited to the amount of the loan (and your life insurance need is often significantly higher than just the loan balance.) 250,000 - 1 million for an average family depending on your age, age of your dependents, life style etc. Affluent families need more... 3. You continue to pay for the amount of insurance originally purchased, say $200,000, on a mortgage life policy, even though as time goes by the death benefit (that pays the bank) decreases as you pay down your loan. (you can cancel these at any time - they are not part of your mortgage.)

Buying you own policy that you control is better. You select the amount of insurance and who the beneficiaries are, as well as the type of policy (there are a lot to choose from... and by the way I don't recommend universal life either as the costof insurance keeps going up and eventually eats up the policy.

But you SHOULD consider mortgage life insurance IF you are in bad health. Many of the companies do not underwrite for health. It may be the most cost effective way to get some coverage.
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July 21 2009
I agree with smile 4 u.
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September 03 2009
Most homeowners need Life Insurance, but you want a policy that provides you with flexibility on how it's used in the event of a premature death.

At Farmers, we provide homeowners with discounts on their home and auto insurance when they buy life insurance from us.  Contact your local agent for a quote.
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September 29 2009
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Your decision to buy life insurance has nothing to do with your mortgage per se. It should take into account how you will leave your dependents if you die...mortgage liabilities as well as all others included.
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February 27 2010
If you can't get regular term life insurance, you might want to explore this option...but don't take the first offer that comes along. Check with an independent insurance agent as to what might be available. A friend of mine bought this insurance because he could not qualify for term life. It's not the best answer, but at least his wife will have a paid-off house should something happen to him.
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February 27 2010
Really? was this a post from last summer????

You guys must have found a solution by now...
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February 27 2010
 
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