Mortgage Payment Protection
I ignore most of the direct mail solicitations I get, but this caught my
attention. Does it have merit?
I live in an upscale section Los Angeles, and have about $150,000 and 15
years to go on my mortgage. I have homeowners, of course, but not earthquake
insurance. I also do not have disability insurance that would pay my
mortgage in case something happens to me.
My mortgage company sent me an solicitation from ACE INA Direct Specialists
for something called Disaster Mortgage Protection. It costs 1.25% of my
monthly payment (or $20.18). Here is information about the insurance:
http://www.youdecide.com/pfs/content/templates/client/dmp/index.html?...
=0270257977
Does this sound useful or is it unnecessary?
These payment protection insurances are scams. Unfortunately, most
lenders see fit to sell their customer lists to the slime that run
these outfits.
If you carry proper fire and earthquake insurance, the payment
protection gimmick is redundant and unnecessary; you are paying twice
for worse coverage.
Disability insurance, in an amount sufficient to meet your expenses
(remember, disability payouts from insurance you paid for are
tax-free), is also a good idea. Mortgage disability, however, is a
scam.
If you read the policy all it does is cover your mortgage payment while you
are unable to live in the home. In the case of a bad earthquake your home
would be totaled and you would get the $$ to rebuild your homeowners covers
temporary housing so you would not have to pay twice!
I do think the amount is reasonable I am just not sure of the benefit!
My agent when I lived in California said that in case of a bad earthquake
the chance of the house catching fire was pretty great and not to bother
buying the insurance!
The policy does not cover disability at all by the way!