Generally Bank owned life insurance is designed to protect the bank if you take out a loan. I usually recommend buying your own policy. It gives your beneficiary more options. For example, mortgage insurance is usually offered by a bank. It can also be purchased on your own. Both would pay off the mortgage if you die. With the bank owned policy, that is the only choice. What if your spouse doesn't want or need to pay off the mortgage however. This is not always the best option. If you own the policy, your wife or beneficiary may choose to invest the life insurance funds and use the interest to help make mortgage payments. Or the money would be more advantageous elsewhere. Mortgage life insurance with the bank is tied to that mortgage. What if you move? Owning your own policy is portable, you can take it with you to your new home. I usually recommend level term to cover a mortgage. That way you have extra protection as your mortgage decreases because the death benefit will stay level. With a banks mortgage life insurance it just pays off the mortgage to the bank on that loan. Yes it works, but you are better off with your own policy.
The bank owned policy benefits the bank when a family crisis occurs such as the death of a income provider for a family. A personal policy that protects the family in the event of a death is a better place for income protection in the need to protect the mortgage. I agree that many times a Term Life Policy is the best choice for the family mortgage. Your need is best determined by looking at your current situation and determine how much debt, mortgage, and expenses could be covered through your policy. Term Life Insurance is very affordable and offers more coverage for the monthly cost.
Many personal policies include benefits for when you are disabled, stuck by cancer or other critical illnesses, or even confined to your home with a chronic illness. Some families like to use a life insurance policy that provides the coverage and then refunds all of the premium back to them if do not have a death in the family. These options are not typically available through you bank or mortgage company.
Yes, Bank Owned Life insurance works but it would be better to check with an Independent Insurance Adviser to see if your family or business would be better served with a personal policy with a Life Insurance company.
"Bank Owned Life Insurance" is cash value life insurance purchased by a bank on a key employee and included in the bank's balance sheet.
It "works" as a financial tool held by the bank to accumulate additional value on its balance sheet, and to use for a number of different business objectives.
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Many personal policies include benefits for when you are disabled, stuck by cancer or other critical illnesses, or even confined to your home with a chronic illness. Some families like to use a life insurance policy that provides the coverage and then refunds all of the premium back to them if do not have a death in the family. These options are not typically available through you bank or mortgage company.
Yes, Bank Owned Life insurance works but it would be better to check with an Independent Insurance Adviser to see if your family or business would be better served with a personal policy with a Life Insurance company.
It "works" as a financial tool held by the bank to accumulate additional value on its balance sheet, and to use for a number of different business objectives.