Jan 07

Is mortgage protection insurance a scam?

We recently refinanced our mortgage, and ended up with a monthly payment about half of what we’d been paying.

Shortly after the re- fi closed, I started receiving offers for “mortgage protection” plans to pay the amount of the loan if I or my wife pass away before the mortgage is paid off.

It sounds like a good idea on the surface, but none of these solicitations had the name of a company or agent, as I would expect; nor was there any amount mentioned for a premium, although they all knew the exact amount of the loan, as well as the broker/lender we used.

Is this a possible scam? It sure feels like vultures circling.

1 comment

  1. bigtomesz

    It isn’t so much of a scam (there are legit mortgage insurance plans) as much as it is preying on fears.
    Over the life of a mortgage, the premium would stay the same, but the amount of the mortgage left to pay off would decrease. A $150 month premium to pay off a $500K mortgage may seem fair, but ten years from now, do you want to pay that on a $375K balance?
    There are much better ways to protect your assets and provide for things.



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