Accidental Death Mortgage Insurance?

Question

We just got a letter in the mail...an offer for Accidental Death insurance for our home mortgage from Union Security Insurance Company. Should my husband die in an accident (whatever they term an accident to be; they don't have any definitions here) our mortgage would supposedly be paid off, depending on his age at the time of his death. (The benefits decrease with age.)

Is this type of insurance really necessary or advisable? What criteria should one use in determining whether or not they should purchase this type of coverage?

Answer 1

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Answer 2

If you want your mortgage paid in case your husband dies, get REGULAR life insurance.

Accidental death only pays out if he dies suddenly, and accidentally - no heart attacks, no cancer, no strokes, no suicide/murder, etc.  It's like buying car insurance to cover you if you get hit by blue cars.  Kinda silly.

My advice, don't buy insurance that only pays out on ONE kind of death.  You're EXTREMELY unlikely to be able to collect.

Answer 3

the above are right...get life insurance instead!!!  much better way to go!

Answer 4

Check into cheap term life insurance.  It will probably be cheaper and have fewer restrictions on payout.  The beneficiaries can also decide how to spend the funds and not be tied to paying just the mortgage.

Answer 5

Usually that insurance is really cheap.  It depends on your situation if you really need it or not.  Its not a bad idea but keep in mind it only pays if he dies in an accident.  Do you have other insurance to pay the mortgage if he would die?  If you don't you should have.

Answer 6

Accidental death benefits are not worth the money.You are better off using the same money and buying standard term insurance.

Only about one in 6 people dies accidentally. Everybody dies. The best insurance is the insurance that is in force when the claim is made.

Another option is disability income insurance. The best kind is individually owned, non-cancellable, guaranteed renewable. It needs to have both clauses, non-can, guaranteed renewable.

Half of all men who are now age 35 will be disabled between now and their age 65, and their average disability will be two and a half years.

Answer 7

Generally standard term life insurance would be a better deal because it would pay a fixed amount regardless of when it is needed.  Mortgage insurance only pays what you owe on the mortgage, so if your mortgage had been paid down for 10 or 20 years, it would only pay the balance.  Whereas, regular life insurance would still pay the face value of the policy.

In fact if you completely paid off your mortgage, the mortgage insurance would become worthless, but regular life insurance would still have the same death benefit it originally had.

Answer 8

This Accidental Death Mortgage Insurance is often called "Optional Insurance" by mortgage industry professionals.  

In the mortgage industry, Optional Insurance is thought to be a rip-off. If you have any sort of Life Insurance, then your beneficiaries will receive a ton of money if you die. If they choose to pay off the mortgage with that extra cash, nothing is stopping them. If they wish to buy a new house or open a new business (and leave the mortgage balance as it is), then they would have those options as well.

I recommend against Mortgage Life Insurance (Optional Insurance). You can get a better deal on a regular Life Insurance policy that will accomplish the same objectives and offer your beneficiaries more flexibility.

Hope that helps.

Good luck!