Although having insurance cover is good for the future, there are some circumstanced where by the problems that are associated with them are worse than the advantages. For example, if you have taken a mortgage life insurance, then you might have noticed that as time goes by, it has a decreasing value to you. This is because if you had insured your mortgage to repay your house, then it means that you will be paying almost twice, as to what you are required to pay. This is to say that as time goes by, the benefits that you would have had if they took charge of the mortgage at the time you started to pay for your mortgage life insurance deteriorates. Let us take an example when nothing happens to you, you end up paying for all the mortgage fees, then this means that you will have paid for a service that you would never have, and the company took a lump sum of money from you.
The other disadvantage of a mortgage life insurance is that your family will never see the money that you have been paying for the insurance. This is because upon your death, the insurance company pays the remaining balance to the mortgaging firm hence your family only gets the house and never the excess money. Take an example where you had pain two thousand dollars for insurance of your house and the only balance that you have at the mortgaging firm is five hundred dollars. At the time of your death, the insurance company will only pay the five hundred and remain with fifteen hundred with them. Your family will never have the excess money whatsoever hence you will have overpaid for the mortgage. If you think about it with a clear mind, it is better to go for a term life insurance cover then this plan.
One other disadvantage of mortgage life insurance is that sometimes it is harder for one to control over where the insurance cover goes. This is to say that in case you have a larger debt with another firm, say a hospital, the mortgage life insurance cover will not know that you are in the verge of death and come to your rescue. It will instead wait until the day you die and that is when it will be effective. This means that you could have paid a million bucks to the insurance company but in reality, when disaster strikes, this insurance policy will not give you a health protection cover but that of your property. Sometimes it is better to have universal life insurance where it will take care of anything that goes bad than insuring for the assets.
One thing that many people who have taken mortgage life insurance will tell you is that you happen to pay more for this insurance policy than you would have if you just paid the mortgage itself. Sometimes it is better to manage funds yourself and pay for the mortgage than entrusting a company to repay your mortgages.
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