I visited my bank yesterday to talk about how their mortgage insurance works.

The main question I was interested was this: If I purchase mortgage insurance do the payments decrease as the mortgage decreases? As I pay down my mortgage the insurance coverage is less each month.

If I start out with a $250,000 mortgage and pay it down to $150,000 in 10 years I will only be covered for the $150,000 but the payments will stay at the same amount. This is the case with mortgage insurance.

A 10 year term life insurance policy for $250,000 is going to maintain the same coverage for the full 10 years, and, the payments are going to stay the same.

In this example, you would receive $100,000 less with the banks mortgage insurance plan.

The thing I didn't talk about was actual rates. I was in a bit of a hurry and didn't have time to go through a mortgage insurance application to find out what kind of rates I would pay.

I have a feeling that the rates are going to be roughly the same for the two types of coverages.

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Mortgages seem to be getting larger and larger. Especially reading CNN Money. They've frequently got articles on the average price of real estate around the US.

I remember visiting a shopping mall kiosk in San Francisco in spring 2005 where the lowest price advertised for a house was $450,000. The real estate agent spoke of an interest only mortgage. This is where you could pay the interest only on the mortgage for a period of 5 years!! That was the first I had heard of anything like that.

Canada has some high priced real estate as well. Toronto, Calgary, Vancouver are some places where the average mortgages are $200,000+.

For most people, living on average incomes, these mortgages are pretty steep and scary. There are two options that you can insure your mortgage. 1) Mortgage life insurance and 2) a personal life insurance policy that would cover your mortgage.

MORTGAGE LIFE INSURANCE
Mortgage life insurance is generally offered by the bank and is based on coverage of the declining balance of the mortgage. This means that if you start off with a $250,000 mortgage, the coverage is for $250,000. As you pay down the mortgage the coverage will only match the outstanding mortgage amount. 10 years from now you may only owe $150,000 on the mortgage and that is what will be covered with mortgage life insurance.

PERSONAL LIFE INSURANCE
A personal term life insurance policy is different in that it holds the value of the coverage through out the term. example, you purchase a $250,000 policy to cover your current mortgage. The coverage stays at $250,000 throughout the life of your mortgage.

I believe that it's more cost effective over the long run to purchase a term life insurance policy and I'm going to do a little cost comparing over the next few days. I'll keep you posted.

For the moment I just wanted to make our readers aware that there is another option to Mortgage Life insurance as the lenders are offering it.

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The American Prospect published this article about John Santorum - US Senator. According to this article, this US Senator is under insured.

When I think of a US Senator, I see a person who has developed a "self-emposed life style." Here is a guy that must keep up appearances with the public as well as the political machinery.

In this article published by the American Prospect, this US Senator makes $162,000 and is really living pay check to pay check. He is even getting money from his parents to help offset the bills. (OUCH.. I can't believe that he has to admit to that publicly.)

According to the article, the Senator has an oversized house ...

It is here, some 43 miles by car and a world away from Capitol Hill, that Pennsylvania?s junior U.S. senator, Rick Santorum, and his wife, Karen, bought a home on November 14, 2001, for $643,361 (now assessed by Loudoun County at $757,000). (The property has a $500,000 mortgage against it.)
...
The Santorums bought their oversized Shenstone ?estate? even though his financial disclosure forms since 2001 have shown little family income beyond his Senate salary, now $162,100, and he admits that life hasn?t been financially easy. The senator made a startling remark to The New York Times Magazine last spring: ?We live paycheck to paycheck, absolutely.? But he explained that his parents help out. ?They?re by no means wealthy -- they?re two retired VA [Veterans Administration] employees -- but they?ll send a check every now and then,? he said.
...
On his 2002 disclosure form, Santorum listed liquid assets, primarily retirement accounts and life insurance, in a range no greater than $140,000.

This US Senator family who currently enjoy a nice income of $162,000 and little other income, would have big problems if their main bread winner past away unexpectedly.

If they're barely getting by on $162,000 they would have to immediately sell their mansion and move into something more affordable. By the sounds of it, $140,000 cash would barely last this family with 6 children for 1 year after paying debts, funeral expenses, and other expenses associated with his death.

The wife and mother would have to get a job, if she isn't working already to try to support their lifestyle.

I thought this was a great example of being under insured, especially with such a public personality. The mentality seems to be, "we're doing this all hoping that the main bread winner doesn't die." "Actuarily speaking, the bread winner is not supposed to die until age 75", (or what ever the current number is.) Thus it is okay for people to take on huge debt and leave their family completely exposed.

Although the article doesn't mention it, I hope that this senator at least has mortgage life insurance.

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Here is a BIG QUESTION for you. Your Life Has Changed Over the Past Year; But Has Your Insurance Kept Up?

I.I.I. Recommends an Annual Review of Insurance Needs; Top 10 Questions to Ask Yourself

NEW YORK, January 27, 2006-Major purchases and lifestyle changes such as marriage, divorce or retirement can have a profound effect on your insurance, according to the Insurance Information Institute (I.I.I.).

?To make the most of your insurance dollars, it is very important that you let your insurance agent or company representative know about alterations to your home and other major events in your life,? says Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. ?A great way to start the new year off on a firm financial footing is to discuss your current insurance needs with your agent, broker or company representative to make sure that it is up-to-date.?

A recent national survey* found that least 32 million U.S. households own insurance policies that aren?t right for them-is yours one of those households?

The I.I.I. recommends asking the following ten questions:

1. Have you gotten married or divorced?

If you have gotten married, you may qualify for a discount on your auto insurance. Couples may well bring two cars into the relationship and two insurance companies, so take the opportunity to review your existing coverage and see which company offers the best combination of price and service.

If you are merging two households, you may need to update your homeowners insurance. And you may want to consider increasing your insurance for any new valuables received as wedding gifts, and for jewelry such as wedding and engagement rings.

After getting married, it is also important to review your life insurance needs. Becoming a couple means sharing responsibility with and for someone else; life insurance is an excellent way to ensure that the surviving spouse is taken care of in the event of the premature death of the other spouse.

If you got divorced, you will probably no longer be sharing a car and may move to a smaller home-you should inform your insurer as this will mean setting up separate auto and homeowners policies.

2. Have you had a baby?

If you?ve recently added a child to your family (by birth or adoption), it is important to review your life insurance protection-a third of those families with a new baby, or 5 million households, haven?t updated their life insurance protection.

If you?re planning for your life insurance to match your survivors? expenses after your death, the new child will likely add to those expenses-requiring more life insurance to keep them secure. If you plan to save for your child?s college education, life insurance can assure completion of that plan. Don?t forget to update the beneficiary designations on your life insurance to include the new child.

To find out what the other questions are that you should ask yourself, please read the complete article just be clicking on the link.

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One of the best types of life insurance that is in Canada is call T100 or Term to 100 life insurance.

This type of policy is one where the insurance rates don't change until you reach the age of 100 and the policy expires. The coverage stays in place until you reach the age of 100.

An interesting part of the T100 life insurance policy is that if the client reaches the age of 100, the benefit is still paid to the client. So you're going to receive the benefit whether or not your reach the age of 100.

An example is a thirty year old couple. You can get approximately $250,000 coverage for approximately $100 per month.

You pay $100 per month for 70 years or 840 months. That's a total of
$84,000 paid into the plan which guarantees a payout of $250,000. This is a still a good rate of return on your money.

If you're Canadian, please visit our life insurance area for Canada and sign up for a life insurance quote.
We will have an agent contact you to discuss the Term 100 or T100 plan that is best for you.

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20 YEAR VIEW ON YOUR LIFE INSURANCE POLICY

I've been reading about other people's experiences with their life insurance policies and some of the challenges / misperceptions they've had.

For this example, let's assume you were 25 when you took out your 20 year term life insurance policy. This policy will be complete when you're 45.

Just imagine all of the things that happen in your and your families life in that 20 year period.

The following can happen in that 20 year period:

• Get married
  
• Have children
  
• Go on several vacations
  
• Have several jobs or positions at your job
  
• Move to a few different homes, possibly new cities
  
• Possibly have grand children

With all this stress you may have gained a few extra pounds, or developed some illnesses related to stress.

Your life has changed an enormous amount and your life insurance "risk situation" has more than likely changed.

From a life insurance company's perspective you're 20 years closer to the day of your death. This in itself is going to naturally increase your risk situation.

I bring up all of these points as the impression I've gotten from reading different people's stories is that they're surprised that the Insurance Company has changed it's policies from 20 years ago.

The insurance company really hasn't changed their policies as much as you've changed as an individual.

When you were 25 years old, life was new exciting and refreshing. You had no health problems and lots of energy to burn. You just started into your career and probably hadn't gotten married yet. Also, when you were 25, you didn't have enough money to go on big vacations or start into expensive hobbies such as skydiving etc.

The last time you thought about your insurance policy was 20 years ago when your life was alot simpler than it is now.

If this sounds like your situation, it may be time to re-assess your risk situation and have a look at getting a new policy with the "updated" features that go with your current life situation.

Life changes for people. Insurance companies view of risk doesn't really change. It may be time to contact one of our agents to readdress your life insurance situation.

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We got an interesting question about whole life policies and how interest from the savings is supposed to help pay for the premium amounts.

I remember many years ago taking out a whole life policy and one of the big selling features was that eventually the policy would be paid up by the interest earned on the cash I was "investing". This was around 1985 and interest rates were much higher than they are now.

So the question I'm going to ask is: if you took a 20 year whole life insurance policy out in 1987 and the payment structure was based on 15% interest rates, would you still be stuck with a balance on the account, after 20 years because the current interest rates are 1.75%?

Obviously 1.75% interest rate won't help pay off your policy like 15% will. I'm wondering about the wording in the life insurance contract and how it deals with that.

If you have a whole life insurance policy like the one I'm describing, I encourage you to have a look at it. You don't need surprises 20 years later!

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MassMutual shafting customers?

I found that article in Google Groups. A 65 year old man is complaining that MassMutual Life insurance increased his premiums by 350% with no notification what so ever.

The interesting point is that the man and his wife hadn't looked at their policy since they took it out in 1989. They weren't really sure about the terms of their life insurance policy.

Now they're angry because their premiums have increased a huge amount.

The question is: what did they agree to at the time. Did they agree to a fancy deal where the policy would automatically renew with no medical, but at higher premiums?

I'm going to ask my expert about this and write a little more about this topic.

I encourage people to dust off their life insurance policies if you haven't looked at it for a while. The time to get really familiar with the policy IS NOT when you're 65-70 years old and starting to look forward to it's benefits.

The life insurance industry is highly regulated, and I can't see them increasing life insurance rates which weren't agreed to in the original contract.

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Suicide - Life Insurance Discussion

Suicide Holidays Discussion

These discussion group topics were a few years old, however they're still relevant and horrifying.

In the one post, the guy or girl is asking for advice on how to kill themself, and then how to make the death look ok for the life insurance company.

Honestly, these people need help.

The answer to the suicide question is: most policies require you to wait at least 2 years before you kill yourself. You can't buy a policy today, kill yourself tomorrow and have your beneficiaries reap the cash benefits of your death. Hopefully in that case, a 2 year waiting period would allow you to get some psychiatric help and get better mentally!!

It's always best to read your life insurance policy and check with your lnsurance agent so that you'll know what you agreed to.

I'm pretty floored that people talk about suicide so openly on the internet. While it may seem anonymous, the police should be monitoring those types of posts and giving people help.

BTW... I checked the person who posted the above and they stopped posting a week after these initial posts. That's pretty scary!

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I'm going to explain to our readers how they can get cheap life insurance by shopping online.

If you've done any shopping for life insurance you know that prices for life insurance policies can fluctuate a great deal with different companies.

It turns out that life insurance are based on three basic factors.

• AGE
  
• HEALTH RISKS
  
• ACTIVITY RISKS

START WITH STANDARD RATE:
Life insurance carriers start off with their standard rate for a person of your age. Assuming that your health is perfect and there is no other risk associated with you, you'll get the same price as every one else who has perfect health and no risk associated with them.

NEXT STEP: TAKE A MEDICAL
A medical will tell the insurance company if you've got any serious health issues which could make you a higher risk, mortality wise.

FINALLY: RISKY ACTIVITIES
After assessing your health situation, the life insurance company wants to know if you're involved in higher risk activities with your job or hobbies etc.
Some of the the risky activities are being an pilot, doing scuba diving, sky diving etc. Activities that have the risk of death associated with them.

HERE'S THE CURIOUS PART:
Understanding that risks are risks, your real risk assessment to one life insurance company is the same for the next life insurance company. ie.. you're not going to die any faster for one life insurance company than another, to put it graphically.

WHY HIGHER PRICES WITH CERTAIN COMPANIES?
Based on the discussion above, certain companies might assess risk differently and want to charge differently than other companies.

Companies specialize in different areas
I've heard of companies that like to specialize in certain health risks more so than others. Thus they would charge lower for those health risks than other companies because they have more experience assessing the risk.

As with every industry, those who specialize in certain areas of their field can generally offer better prices and better services than other companies. The same is true for life insurance.

Some companies charge higher commissions
Some companies use sales people who go out and market in the traditional way. These sales people need to make more per commission because their process is slower. Thus the insurance company needs to charge a higher rate to compensate their insurance reps.

Some life insurance agencies (such as the ones we deal with) don't use traditional sales methods. They rely on services such as ours to find them people interested in purchasing life insurance on the internet. They work with the customer over the phone and thus their costs are much lower.

Not only that, these agencies can get pricing from many different life insurance carriers. They are able to shop from the companies that specialize in your particular risk.

I was chatting with a life insurance expert from Conservest today and asked him the following question: "Why does one company charge more than another"

Conservest Answer: No reason. The prices are set by the company based on their personal mortality tables and if one company charges more it's becuase they see a high risk. They are constantly changing and updating in most cases they are going down.

"and prices are based on Age and Health, they use the medical to confirm your health class and the premium is based on that. If you don't fit in you could be rated and have to pay more then the Standard rate."

THE BOTTOM LINE:
If you're shopping for cheap life insurance, it's really important to spend some time at it. Signing up for a quote on this site will help out the process.

Our agents will shop many different life insurance carriers for you and get you the best quote for your age and risk situation.

We advise that you ask the insurance company that you're looking at buying from if they specialize in life insurance for your situation. After doing a little digging you will probably save money and get cheap life insurance!

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I'm doing some more investigation into life insurance and trying to get into some meaty questions:

I quickly interviewed a life insurance expert from Conservest over at my other site Life Insurance Interview

I am really interested to know if there are reasons why you wouldn't get your money from a life insurance company if you died.

Some of the short answers for why you wouldn't get your money is:

• You made fraudulent statements on the application
  
• Acts of war
  
• Suicide happens within two years of the policy being issued.
  

Otherwise, if you die, your beneficiaries should be paid within a week or so of your death.

LIFE INSURANCE COMPANY MUST PAY
The life insurance company must pay out the policy within the agreed amount of time.

The life insurance company can however dispute the claim for up to two years from the time of death if they suspect that something fraudlently has happened.

The thing that always runs through my mind is this: What happens if you pay on your life insurance policy for 40 years and then somehow your beneficiaries don't collect on it.

The insurance expert that I interviewed is from Canada and it is important to make note that the regulations between Canada and the rest of the world are different.

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