The Life Insurance Settlement – Is It Right For You?

The Life Insurance Settlement – Is It Right For You?

Life settlements are a relatively new emergence in the life insurance market. Offering benefits to both the policyholder and the investor, it’s no surprise that the life settlement market has grown so explosively in the last few years.

What Is a Life Settlement?

A life settlement is basically an investment made into the life insurance policy of someone else. An investor purchases a policy by paying the original policy owner the purchase price. This gives the investor the right to all death benefits once the policyholder passes away, and also places the onus of premium payments on them.

Who Benefits Most From Selling Their Life Insurance Policy?

Most often, those who can benefit from selling their life insurance policy in the life settlement process are seniors and those having low life expectancy due to illness. Usually, it is those aged 65 and over who can sell their policy.

How Much Can A Senior Make From Selling Their Policy?

The amount that can be received from selling a policy will depend on a range of factors. But the return on a life settlement to a senior can range anywhere from few to over 40% of a policy’s face amount.

Why Are Life Settlements So Popular?

Life settlement popularity is due to the fact that both the investor and the policyholder benefit from the sale; the policyholder receives cash from a policy that may not otherwise pay out, while the investor receives a large payout once the policyholder passes away.

A life settlement also provides a way to avoid the large percentage of insurance policies which don’t pay death benefits upon their expiry, as well as get rid of unwanted coverage with some monetary return.

As with most things, the life settlement option may not work for everyone, even though it may look like a viable way to receive much-needed cash. There are many circumstances which can make a life settlement the wrong choice.

Coverage and Financial Implications of Life Settlements

For those in their retirement years, having life insurance represents an important asset. Engaging in the life settlement process is not a good idea if life insurance coverage is still needed, as selling a policy leaves you without coverage.

As well, insurance companies will limit the amount of coverage they will provide to one person. When life settlement occurs, this affects the total insurability of an individual, meaning that the additional coverage needed to justify a life settlement.

Financially speaking, keeping an existing policy is a good idea if it’s unlikely that the individual will be able to afford coverage following the settlement process.

Many seniors consider life settlement when they want to get better terms with a new policy. But this may not provide the full cash value from the old policy with which to finance the new one. A simple comparison of the tax due on a settlement with the numbers of the exchange will reveal the feasibility of a life settlement.

Any profits received from a life settlement, excluding paid premiums are subject to tax, which can mean that the potential profits are not worth selling the policy.

Identifying Quality Life Settlement Assistance

Care should be taken to select a broker when the decision to go forward with life settlement is made. Most important is finding a broker who will keep your, and not their best interests in mind. A broker who is anxious to close quickly is not a broker that is concerned about the benefits to you.

A broker who is capable of being transparent and who is not afraid to tell you everything you need to know about the advantages and risks of life settlement is the broker to consider. The same should be considered when choosing the company that will process a settlement, as a company whose settlement program is well-managed and who has high standards is much more likely to offer you the quality and knowledge that you need to proceed with this option.

Guest author Adam Foley writes on a variety of topics, but is particularly well-versed in the topic of life insurance.  He is a frequent contributor at  You can also find .

Mis-Sold Payment Protection Insurance: Some Interesting Facts

Mis-Sold Payment Protection Insurance: Some Interesting Facts

Payment protection insurance or PPI is that insurance which compensates your repayments as a result of any unprecedented event. You might lose your employment, fall sick or face an accident and this may hinder you from making repayments of your loan. Payment protection insurance comes in handy particularly in these circumstances. Usually, financial service providers like mortgage companies, vehicle loan companies and credit card providers sell you payment protection insurance.

Payment protection insurance can accumulate to 40% of the loan repayments you make. This is almost totally a gain for the lenders and banks. As a result, they often try to shove the customers to a loan contract to which payment protection insurance is a part. Since 2011, the banks have collectively decided to make compensation payments amounting to billions of pounds. This earmarked amount has been named as PPI refund.

How do you know if you have been mis-sold payment protection insurance?

When the payment protection insurance cost is mistakenly added to the cost of your loan without your permission, then you have been mis-sold payment protection insurance. To be more precise, if any of the following conditions was there, it is a surefire sign that you have been mis-sold payment protection insurance:

  • Irrespective of the fact that you didn’t request for it, it has been included in the policy
  • You were informed that payment protection insurance was mandatory or you have an improved probability of acknowledgement of your loan application
  • You did not have the idea that payment protection cover was discretionary
  • You were jobless, self-employed, or retired from work at the time the cover was withdrawn
  • They did not inform you about selling PPI to you
  • They did not provide the complete details of the policy to you
  • They did not inform you that you can purchase PPI from any other place
  • The whole cost of PPI was not clarified to you
  • If you had particular disease which makes you exempt from buying PPI but still it was sold to you

When you can make a Payment Protection Insurance refund claim

  • Majority of policies have an upper age cap which is typically 65 or 70. At the time you bought the policy, if your age was more than that, you are allowed to make a claim for refund.
  • If you bought PPI from one of the companies against which FSA took some stringent steps, there’s high probability that you will get your refund.
  • You can make a claim if you already had substitute cover in place like employer illness and income protection.
  • If you have purchased PPI for compensating a loan with an extensive term, it is probable that the PPI will be exhausted prior to the loan repayment is made. Majority of policies have a term of five years. Therefore, if the tenure of your loan is more extensive then the seller should have made it clear in the beginning. You can make a claim if any such thing didn’t happen.

It is advisable that you take the help of a specialized payment protection insurance claim company. They have all the necessary experience regarding how to deal with banks and can help you get the maximum benefit or claim. If it is decided that PPI was mis-sold to you, you will receive the whole premium amount along with interest. However, beware of scams.

How Much House can you Afford?

How Much House can you Afford?

mortgage_loanWhen the economy in the United States started to take a turn for the worse in 2008, the housing industry was at the forefront of the problem. Being a bit more specific, it was the mortgage industry that took down a good amount of once-profitable banks, throwing the whole housing industry into turmoil. But how could one industry knock down the strongest economy in the world?

Cause of the Problem

The simple answer would be greed. Both lenders and homebuyers were greedy during the housing boom, as banks often lent money to those who could not afford the monthly payments. Banks and the media sold the idea of the American dream to homebuyers, and approved those same people for amounts that were much higher then they truly could afford. In turn, foreclosures started to pile up at an alarming rate until the banking industry could no longer afford the new amount of failed mortgages.

The good thing about history is that people can learn from the mistakes of those before them and hopefully not make the same ones again. Those who are looking to purchase a home, now that the market is starting to rebound, need to really sit down and analyze their budget to truly make sure that a new mortgage payment is within reason. But there is more to a affording a new home then just the amount of the mortgage.

How Banks Qualify a Lender

Banks use something called a debt-to-income ratio to determine how much of a monthly mortgage payment someone can afford. The ratio takes all of the potential homebuyers secure and unsecured debt, such as credit cards, auto loans and personal loans, and adds up the monthly payments on those. Then, the lender takes the total monthly income of homebuyer to come up with a debt-to-income ratio. If someone’s expenses were $300 from an auto loan, $100 in credit card payments and $75 for a personal loan, the total expenses would be $475. For this example, we will use an income of $4,000 a month, so the ratio would be 475 to 4000, or about 12 percent.

Most banks want the homebuyer to satay under 36 percent, including the new home mortgage. FHA loans, or Federal Housing Association loans, will stretch the percentage to 41 percent; however, they require the borrower to take out additional mortgage insurance on the loan. So, in the scenario above, that homebuyer could qualify for a payment up to around $1,000 a month, since that would bring the debt-to-income ratio to around 36 percent.

Hidden Costs in Owning a Home

Even though a person may qualify for a mortgage of a certain amount, that doesn’t always mean that they should max out the amount they were approved for. Besides the mortgage payment, a homebuyer has a lot more to consider when purchasing the home. First, they will have to purchase homeowner’s insurance, raising the cost immediately. Also, utilities may be more expensive at the new home compared to the old one, especially if the home is larger. Plus, if they are renting now, they may not have to pay all the utilities, but if they pay a home, all the utilities will be their responsibility. Finally, a new homebuyer needs to understand that the new home may have large, unexpected repair bills like a leaky roof or foundation. If they are smart they will have the problem fixed the right way by a pro like Tredent Contracting and it can put a strain on the budget unless they are prepared for it.

If a homebuyer truly wants to make a smart decision to avoid foreclosure, they should make a budget and come to a number they are comfortable with before even being approved by a lender. Then, as long as the lender approves the buyer for the predetermined payment, the homebuyer will be more comfortable knowing they can afford the payment. The main point for them to remember is to stick to their budget and not get caught up in the emotions of finding the “perfect” house and over spending.

Owning a home is still the American dream, and it is still within grasp for those who make wise decisions with their money. A buyer just needs to be smart and realize what they can afford before they jump into owning a home. When buying a home, the buyer just needs to make a conscientious, calculated decision, and they will be able to enjoy their home for years to come.

Bought the perfect home but can’t manage the lawn? That’s why Aaron Gordon writes on behalf of Champion Yard Service, where their services include Seattle lawn mowing.

Modern Families Financially Unprotected from Death and Illness

Modern Families Financially Unprotected from Death and Illness

New research conducted by Sainsbury’s Life Insurance has revealed that there has been a significant increase in the households that are comprised of unmarried couples, same sex couples and single parent families.

Nuclear Families More Likely to Take Out Cover

Sainsbury’s Life Insurance analysis or Government data has revealed that in the last 10 years, there has been a significant change in the way that households are comprised.

Unmarried couples with dependent children, single parent families and same sex cohabiting family units have all seen significant increases in the last decade (which can be seen in the table below).

The insurance company discovered that the aforementioned groups are much less likely to be protected by life or critical illness cover than those with a more ‘traditional’ family set-up.

Percentage of people who only have life insurance Perecentage of people who only have critical illness cover Percentage of people who have life insurance and/or critical illness cover Percentage of people who have both life insurance and critical illness cover
Households With Children
Married Couples living with children 37% 2% 58% 20%
Single parent families 32% 1% 42% 9%
Unmarried couples living with children 31% <0.5% 41% 10%
Households Without Children
Married couples living together with no children 34% 1% 43% 8%
Unmarried couples living together with no children 31% 4% 37% 2%
Households With or Without Children
All married couples 35% 1% 50% 14%
All unmarried couples 30% 2% 38%

(Source: Sainsbury’s Life Insurance)

“It’s Important to Ensure You Are Financially Protected”

Head of Sainsbury’s Life Insurance, Helen Williams, has said: “Worryingly, our research suggests modern family units are much less likely to protect their dependents with life insurance or critical illness cover than the traditional notion of a stereotypical family.

“Whatever the make-up of your family, it’s important to ensure you and your dependents are financially protected. Having life insurance and critical illness cover gives you peace of mind that if you or your partner dies or cannot work due to illness, you could have one less thing to worry about at a difficult time.”

In related news, another supermarket chain has announced that they are to put more focus onto financial products in their stores.

The supermarket chain Asda, have announced that they will launch Asda Money, in order to promote products such as currency exchange, insurance and credit cards.

However, unlike similar schemes currently run in Sainsbury’s and Tesco stores, Asda Money will only be able to promote products provided by specialist companies as they do not have their own banking licence.

Other products that will be available via Asda Money include; breakdown cover, as well as travel, home and car insurance. Information on all of their products will be available at checkouts and online.

What This Means to You

If you haven’t really thought about taking out life insurance or critical health cover, it may be time to do so. Just taking out this form of cover could end up saving you and your family hundreds should the worst happen.

This article was written on behalf of Table Top Fountains by Dan of To compare life insurance, health cover and many more financial products that can make your life a less stressful experience, look no further than this quick and easy service.

Difference between multi car insurance in US and UK

Difference between multi car insurance in US and UK

Drivers on both sides of the Atlantic can benefit from multi car insurance to cover two or more vehicles listed at the same address. Although there are some differences between what multi car insurance covers in the US and the UK, as well as between different providers in each respective country, there are more similarities.

In the US, drivers can take out a basic liability policy to provide minimal cover for their vehicles, whereas UK drivers are usually encouraged to take out a higher level of cover to offer financial security in the event that their cars are stolen, lost or damaged in accidents. Multi car insurance offers a cost-effective alternative for drivers who are concerned about lowering the cost of their insurance premiums without having to settle for lower cover, as these policies can cover two to five cars listed at the same address – in the US, you may be able to take out insurance for more than five cars, depending on the insurer, though this will usually be restricted to vehicles for commercial use.

The actual savings that can be enjoyed from multi car insurance represent one of the greatest differences between insurers in each country, with multi car insurance in the UK typically offering higher percentage discounts – often up to 33 per cent saving when insuring more than one vehicle on the same policy, compared to just 25 per cent saving in the US. The more cars that are insured on the same multi car insurance policy, the greater the savings are likely to be. It should also be noted that car insurance and other auto expenses are generally cheaper in the US compared to the UK.

There are various factors that will influence the cost of your car insurance too, including the make, model and age of the cars being insured and the age of their drivers. In the US, young and teen drivers are able to take advantage of a parent’s car insurance coverage until they reach 25, whereas all adults in the UK are required to have their own car insurance.

The US is a country built for cars, and this combined with its higher population means there is greater demand for multi car insurance for USA cars, as well as more providers offering these policies. However, this greater availability also unfortunately means a larger number of disreputable firms offering multi car insurance at unreasonable rates or with other inherent problems, making it even more important for drivers in the US to do their research before taking out a policy. UK drivers need to check the credentials of insurance firms too, which can be best accomplished by asking the opinions of people in your family and social circle, or by reading testimonials from real customers online.

Multi car insurance can potentially deliver great savings compared to standard auto insurance, but only when you compare different policies available to confirm that the one you’ve chosen truly offers the best value for your money.

A brief guide to compensation claims

A brief guide to compensation claims

There are many types of incidents that may lead to compensation claims. For example, you may be injured in:

  • road traffic accidents
  • workplace accidents
  • a trip or fall on the pavement
  • medical negligence

If you have suffered pain and discomfort as a result of somebody else’s actions or failure to act it may be worth speaking to a personal injury lawyer.

What will you have to do?

You may be nervous about approaching a lawyer because you are worried about the costs involved. However, compensation claims are often run on the basis of a “no win no fee” agreement. If your claim is not successful, the lawyer does not get paid.

In a “no win no fee” case, a lawyer will listen carefully to the information that you can provide. They will only take on your case if they have a great deal of confidence that you may win. After all, if you do not, they will have been working for nothing!

What the lawyer will typically expect from you includes a detailed account of what happened and co-operation in terms of attending medical appointments and gathering evidence.

Will you have to stand up in court?

This depends on how the case proceeds. First you may have to give evidence in a written down statement which your lawyer will help you prepare. If you are not confident about writing formal documents do not worry as help will be on hand from your team of solicitors.

Before anyone sets foot in a courtroom there is normally a period of negotiation where the parties’ respective lawyers may try to “settle” the claim, which mean that a sum of compensation may be agreed.

If yours is a claim for car accident compensation your lawyers normally deal with the insurance company who insured the person who caused your accident.

If the case is settled at this point (which many are), you may not have to even enter a courtroom. However, if no agreement can be reached, you may have to go to court.

If your case is one of the few compensation claims that does go to court, some cases may be decided on the basis of evidence that has been written down. In the event that your accident claims lawyer does need you to appear in person, you may rest assured that he or she will guide you through the whole process.

The Five Most Important Features of Car Insurance Calculators

The Five Most Important Features of Car Insurance Calculators

A lot of auto owners wonder about car insurance calculators and if they can be an accurate way to determine the costs of different levels of coverage.  Car insurance can be a confusing subject for drivers, especially when there are so many products and features often described with industry jargon and sometimes inscrutable terminology.

But despite all of those obstacles, they are so popular that nearly every car insurance company offers them in one form or another!  How can this be?  What is it about car insurance calculators that make them such a valuable service for auto insurers to provide?

The truth is, just about every customer for car insurance is very sensitive about price, and since car insurance is required for nearly all drivers, with so many auto insurance providers, competition for customers is high.  So, how do car insurance calculators work?

The first series of steps in getting an insurance quote is to determine who is being insured and what kind of vehicle they are driving.  The number of drivers on the policy and their ages are included, then the years of the various vehicles are added to produce a risk profile for the policy.  Older drivers are generally at lower risk for accidents and older vehicles are generally not as expensive to replace.  Both of these factors reduce the costs of premiums, as payouts will be lower in the event of a covered accident or theft.

Since auto insurance assumes the risk for any financial obligations of a covered driver, the next two most important questions are the income and assets of the policyholder and whether they have health insurance or not.  Injuries sustained in an accident could be the responsibility of the health insurer or the auto insurer if the car insurance policy includes coverage for injuries or medical expenses arising from a covered accident.  These two potential risks have an effect on the overall profile.

Car insurance calculators also quite often provide potential customers with ways to select features of their policy.

Among these features is the total deductible.  A lot of car insurance customers will often select a high deductible because it will reduce the premiums on the policy, but those customers sometimes don’t understand is that in the event of a covered accident, the deductible often must be paid in order to obtain the coverages in the policy.  Insurance policies with no deductible cover all of the costs of an accident, damage to a vehicle or theft of a vehicle, with no payments or portions of the damages paid by the policyholder.

In addition to variable deductible settings, something customers should know about car insurance calculators is they allow for the inclusion of different kinds of coverages to see how they will affect the overall cost of the policy and how much each premium payment will be.  Among these different kinds of coverage are uninsured motorist, which is often a very popular additional feature on an auto insurance policy because it gives drivers peace of mind in the event they are in an accident and the other driver has no insurance.

Another type of important coverage is property damage.  This kind of policy feature varies from company to company and policy to policy, but it is also a very important kind of coverage to keep in mind.   Newer vehicles are very expensive to replace, and it’s common in car accidents that there may be parked vehicles, fences, signs, guard rails and sometimes even structures that can be involved in a crash.  All of those potential sources of damages must be covered, and auto insurance comapnies offer property damage liability insurance as one way of addressing the risk.   Higher limits in this category can increase premiums.

Car insurance calculators are a great way to estimate premiums and the costs of obtaining coverage in a variety of circumstances, especially for drivers that are trying to compare coverage’s between two different companies or two different policies offered by the same company.  They are also a great way for customers to become aware of new coverage’s and features that might not be a priority when they are simply comparing policies.  This leads to a better product and a better value for customers of auto insurance companies.

This article was contributed by Theodore Jefferson from He has been writing on different insurance related topics for the past several years. Theodore is currently studying to become an Insurance agent.

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How to save on your home insurance

How to save on your home insurance

Home insurance is a product offered by almost all property and casualty insurance companies of the country. Home insurance policies provide a wide range of coverage to protect a home against all sorts of damages and losses caused by a natural disaster, theft or anything else. Unlike an auto insurance policy, buying a home insurance policy, also known as homeowner insurance policy, is not mandatory by laws. Still having home insurance helps a homeowner by providing necessary coverage for his home, personal possessions and liabilities.

Tips to save on home insurance policy

In some states, the cost of home insurance is really very high that many homeowners can’t afford it and as a result, their homes remain uninsured. However, there are a number of methods through which a homeowner can save on his existing or new home insurance policy and the methods are,

  • Bundling the policies – Should a homeowner buy both car and home insurance policies from the same insurance company, he can be entitled for getting multi-policy discount. This discount helps him save as much as 15% on the premiums of both home and car insurance policies. This discount is also called as multi-line discount.
  • Being loyal to the insurer – Insurance companies offer special discounts to the policyholders, who have been working with them for many years. The percentage of loyalty discounts depends on the length of loyalty. Insurance companies always offer better deals to the loyal insurance leads.
  • Adjusting the deductible – Homeowners, who are not likely to file frequent claims, can reduce the cost of home insurance policy premium by increasing the amount of deductible. However, homeowners, who need to file frequent claims, should not increase the deductible amount; rather they should pay higher premiums.
  • Installing home security devices – Insurance companies often offer discounts to the homeowners, who have installed home security devices in their homes. These devices may include sprinkler and home security alarm. Insurance providers offer discounts for using fire proof materials for roofing. Smoke free households are also eligible for getting discounts.
  • Improving credit rating – People with better credit rating often get discounts on their home insurance policy premium. Homeowners, who file frequent claims, are not likely to get any discount.
  • Shopping around and comparing quotes – There are a number of websites that offer free insurance quotes. Homeowners can compare quotes offered by different insurance companies to make a better and affordable deal. They can also visit sites that look for eligible home insurance leads.

Homeowners, who are truly interested in insuring their homes, should follow the tips in order to save on their home insurance policy premium. When it comes to choosing an insurance company, they may visit websites like and get customers’ reviews on different insurance companies.

Author’s bio – Daniel Lewis is a senior insurance advisor at Insurance Leads. His insurance related articles are laced with deep insight and knowledge, and have benefited numerous insurance-seekers.

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Annuity vs. Term Life Insurance – The Pros & Cons of Each

Annuity vs. Term Life Insurance – The Pros & Cons of Each

Protecting your future can encompass many strategies and avenues, some of them conflicting. Yet it remains undisputed that a blueprint of some kind is required to achieve our goals. In the case of planning for the unknown, two insurance instruments stand out as deserving scrutiny.

Planning how you or your family will weather the loss of a wage-earner is the earlier concern, and planning for life after wage-earning is over is the later concern. Both have programs available to deal with these situations, and both have their pros and cons. Term life insurance – for protection during peak earning years Term life insurance is a fixed length contract which provides life insurance during a specific time period of high concern. For many, this is the child-rearing years and for others it may be during a business start-up or while a higher level of debt is being paid down. Term life is typically offered for 10, 20 or 30 year durations. The premiums are based on this fixed length and take into account your age, gender, health and other factors specific to that term. If the policy owner lives beyond the end of the term, the policy simply ends. If the conditions that made you seek protection are still present, you can renegotiate an extension with an eye on your current life and health factors for the new term. The main benefit of this type of policy is that it is a less expensive way to protect against the loss of a significant income when it is being counted upon most.

It is frequently used when the policy holder is younger and healthier, so the premiums are lower than they would be in a whole life policy. On the other hand, it is generally not used as part of estate planning, since there is no residual value when the term ends. This leaves you with the need to re-analyze your family’s needs later in life. Annuities – for protection of income in post-earning years An annuity, by contrast, is protection against outliving your savings. The value of the annuity is accumulated by remitting premiums over time, and is then paid out through a systematic payment, often monthly, providing an income during retirement for the life of the policy holder, or “annuitant.” The annuity is beneficial in building an asset with tax-deferred earnings over many years. In addition, new legislation allows the cash value to be transferred tax-free into a long-term care insurance plan if needed.

Unlike 401(k) and IRA accounts, there is no limit to the amount that you can contribute. Some annuities are structured to provide a death benefit, particularly if the annuitant dies before payouts begin, allowing the annuity to represent a part of an estate planning strategy. As with other retirement instruments like the IRA and 401(k), the annuity allows you to directly name a beneficiary, enabling a payout without probate or estate taxes. The annuity does have some drawbacks, among them the possibility of poor performance and unfavorable tax treatment for shorter durations of ten years or less. You would also pay full income tax rates if you withdraw funds before the payout period begins. For either type of insurance strategy, it is important to check the current tax implications and investment projections. An estate planning attorney or a tax adviser can help to weigh the specifics of your situation and the current tax laws. Liza is a financial blogger with an interest in showing readers how to save money and find affordable life insurance.

Liza is a financial blogger with an interest in showing readers how to save money and find affordable life insurance.

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Things that you must know about mortgage insurance

Things that you must know about mortgage insurance

There are different types of mortgage insurance available in the market and private mortgage insurance (PMI) is one of the most common types of mortgage insurance that people often complain about. Private mortgage insurance often requires the homeowners pay a heavy premium, but even then it doesn’t provide required coverage that most homeowners look for. In fact, it provides almost no protection to the borrowers.

There is another type of mortgage insurance that pays off only in the event the borrower dies. For this type of mortgage insurance, a borrower usually needs to pay less. Homeowners generally avoid this type of insurance as they can get same sort of and sometimes even better death benefits through a life insurance policy.

Why should you buy mortgage insurance?

A private mortgage insurance (PMI) policy protects the lender instead of the borrower. Still homeowners often need to buy such insurance as the lenders require them to buy. The lenders generally require the borrowers, who make less than 20% of the appraised value of the property as down payment. The less the borrowers put down, the more risks to the lenders. This is the reason why the lenders need the borrowers to buy mortgage insurance and protect them against a mortgage default.

Being a borrower, you don’t get any scope to choose any mortgage insurance provider and also negotiate on the rate of premium. The lender is likely to do this on behalf of you. If you take out a home loan, which surpasses 80 percent loan-to-value, you’re much likely to buy mortgage insurance. The mortgage insurance will pay your lender, should you fail to pay the premiums and your house needs to be foreclosed.

Federal Housing Administration or FHA requires the homebuyers to pay additional charges apart from the upfront premium. The additional fees charged by FHA may include monthly premiums comprising principals, interests and also taxes.

Can you cancel mortgage insurance?

If the value of your home equity increases by at least 20 percent, either by paying off your loan or by appreciation, you can cancel your mortgage insurance. However, you can’t do this unless the lender gets the proof that the position of your home equity is secured and value has been appraised by at least 20 percent. The lender may also require you to pay for independent appraisal. You may not get a voice in selecting the appraiser or the money that the appraisal may cost you.

In case of an FHA mortgage, you need to pay off 78% of the actual sales price of the property, toward the mortgage. Even if the equity value is appraised, then also you need to lessen the actual principal due.

How can you stop paying for PMI?

There are some effective ways through which you may avoid paying for your PMI.

  • Being a veteran, you can opt for taking out a VA home loan that doesn’t require you to buy PMI.
  • Pay at least 20% of the value of the property as down payment.
  • Pay higher rate of interest.
  • Take out a combination home loan of 80 / 10 / 10. It combines 10 percent down payment, 80 percent first home loan and 10 percent second home loan or mortgage.
  • Apply for HomePath home loan provided by Fannie Mae. However, you need to meet some criteria to qualify for such type of mortgage.

When it comes to mortgage insurance, there is no guarantee that you can take for granted. Your mortgage may or may not contain mortgage insurance, should the equity is less than 20 percent as your lender can pay for mortgage insurance even without a verbal or written consent from you.

Author’s bio: Tim Scott is a senior insurance advisor at He writes for different online insurance journals and portals.

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