Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: $Revision: 1.6.2.16 $; site ima.UUCP Path: utzoo!linus!philabs!cmcl2!harvard!bbnccv!ima!johnl From: johnl@ima.UUCP Newsgroups: net.invest Subject: Re: Mortgage Insurance Message-ID: <109000010@ima.UUCP> Date: Tue, 29-Oct-85 17:20:00 EST Article-I.D.: ima.109000010 Posted: Tue Oct 29 17:20:00 1985 Date-Received: Fri, 1-Nov-85 02:00:47 EST References: <1229@mhuxt.UUCP> Lines: 27 Nf-ID: #R:mhuxt:-122900:ima:109000010:000:1400 Nf-From: ima!johnl Oct 29 17:20:00 1985 > Does anyone have any comments on the worth of mortgage insurance? Mortgage insurance is worthless. (There, that was simple, wasn't it?) More specifically, the idea is that if you drop dead, the insurance pays off the mortgage. That's all well and good, but if that's what you're worried about, you're invariably better off increasing your regular term life insurance by the amount of the mortgage. (I know, the mortgage amount shrinks every year, but for the first years it doesn't shrink by much, and by the time it does the amount of the mortgage is less worrisome.) Mortgage insurance preys on more or less the same fallacy as airplane flight insurance. Sure, there is some likelihood of a plane crashing or of your heirs having a large mortgage to pay off, but the right way to deal with it is by your "general case" life insurance rather than by "special cases" that always cost more. Your heirs are no worse off if you are killed in a plane crash than if you drown in the bathtub, similarly they can use proceeds from any old insurance to pay off the mortgage, and save money and have more flexibility in the bargain. Many lenders require mortgage insurance, which just reminds you that it protects their interests far more than yours. John Levine, ima!johnl PS: I suppose you should increase your disability insurance, too, but that's usually packaged in with the life insurance.