Sophia2457
Registered User
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- 121
Why?Decreasing represents very poor value for money.
Same with decreasing term.Level though dearer is better value ie you pay the same premium for the same cover throighout the term.
You seem to be confusing general life assurance with mortgage specific protection life assurance. Many people advise that you keep the two separate and just take the cheapest cover (usually decreasing term) for the mortgage.With deccreasing at the time you are most likely to claim ie when you are oldest it pays out bugger all after all those contributions. Decreasing should only be an option if you can't afford level.
Decreasing represents very poor value for money. Level though dearer is better value ie you pay the same premium for the same cover throighout the term. With deccreasing at the time you are most likely to claim ie when you are oldest it pays out bugger all after all those contributions. Decreasing should only be an option if you can't afford level.
If it's an investment property then one should question the need for mortgage protection life assurance at all!
OP be aware that if it's an investment property, then the decreasing term insurance premiums can be written off against rental income.
However with an investment property if the next of kin cannot deal with the outstanding mortgage then they can just liquidate (sell) the property since it is not their home.
I know that I am late to the party, but here it goes.
When using term insurance please keep this in mind. Mortgage companies pay all premiums to the insurance company upfront which means that they add the term premium to yhr motgage, itself. This means that you are now pay interest on your term insurance.
eg: $100,000.00 30 year Mortgage; 30 year term inusrance @ $20.00/month = $7200.00 over the life of the term (30 years)
The mortgage co. pays the $7200.00 to the insurance co. at closing. they then place the $7200.00 onto the mortgage making the mortgage $107,200.00 charging you interest on the 30 your term insurance premium.
Everyone is happy, but you! The insurance co is happy they received 30 years of premiums day 1. The mortgage cois happy because they are earning interest on the insurance premiums.
You are sad because you are getting ripped off. Find a mortgage company that will accept your own insurance company and then get level term policy. It will be cheaper in the short and long term (pun intended)!
Wow that's some carry on in the USA. And where they lead on credit we tend to follow (for the next bubble, not currently)
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