You just bought a house and the bank approved your mortgage. Now the bank is trying to sell you your mortgage life insurance. You are excited about your new home and want to protect your family in case something happens to you, so you buy insurance thinking you got a good deal. Not necessarily. Bank mortgage insurance, more commonly known as creditor insurance, is full of fine print that homeowners never read, but if they did and compared it to other insurance plans, they will find that there is a big difference and that they have wasted a lot of their hard earned money. Most people are simply too busy to review their coverage and have probably never read what they bought. After reviewing and researching the bank’s creditor insurance contract, here are the top seven reasons why you should avoid the bank’s creditor insurance product.

Reason n. # 1: Your insurance decreases every year, but its cost remains the same. Your insurance protection decreases with each mortgage payment, but your cost will remain the same.

Reason # 2: the bank is the beneficiary of your policy, not your loved ones. In other words, you cannot choose your own beneficiary for insurance proceeds. Because the bank is lending you the money for your home, you automatically become the beneficiary of all proceeds under a group creditor insurance contract. Unlike temporary personal property insurance, your family cannot use the proceeds from death insurance to cover needs other than mortgages.

Reason # 3: Your insurance rates are not fully guaranteed in the contract. Your bank can change your rates at any time. With creditor insurance, your premiums are paid as a group, which means that your rates can be increased at any time if that group’s experience turns unfavorable. Simply put, if the bank is not making enough money from the product, it will increase its fees.

Reason # 4: Non-smokers pay smoking rates. Most mortgage insurance available through the bank only considers your age when determining the cost of insurance. There are no preferential prices for better health risks. If you are in good health and don’t smoke, be prepared to pay the same insurance rates as someone in poor health who smokes.

Reason # 5: If you switch banks for a better rate, you lose your insurance policy. Mortgage insurance contracts do not allow portability, which means that you cannot take the insurance policy with you if you change mortgage lenders. You will need to reapply and qualify for new coverage at the cost based on your new age. Not only will you pay more for your insurance coverage due to your older age, but if your health has changed, you may not even qualify for the coverage you and your family need, leaving your loved ones in a vulnerable position. All the insurance money you paid to the bank is gone forever with no refund.

Reason # 6: Poor Advice – Most bank employees are not licensed insurance advisers. Most, if not all, bank service representatives are not licensed insurance consultants and therefore cannot offer expert advice on your family’s insurance needs.

Reason # 7: Your bank can cancel your insurance policy at any time! That’s how it is. Most, if not all, creditors’ insurance is a one-way contract. Since the bank owns and maintains the contract with the insurance company, they control all aspects of the plan. If at any time and for any reason the bank decides to remove this product from the shelf, it has every right to do so. Your insurance protection is gone and the money you spent is lost and can never be recovered. Of course, the bank representative can tell you that they don’t think this will ever happen. But the contracts that I have read are quite clear that this option is available to the bank and there is nothing you can do about it.