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Keeping the Family Home.

Mortgage insurance policies can offer peace of mind--but are they worth the cost?

Who:

Edward Mason, age 58, associate principal, Clinton High School, Clinton, North Carolina

Financial Goal:

To make sure his wife doesn't have to worry about paying the mortgage if he dies prematurely

Game Plan:

Mason, whose children are grown and living on their own, currently has term life insurance. He's looking into purchasing extra coverage that would specifically pay off his mortgage.

"That way, if something happens to me, my house would be paid for, and it wouldn't be a financial burden on my wife," Mason says. "Otherwise, it would be very difficult for her to take care of the mortgage and all the other bills that would accumulate.

"I think anyone who is head of a household should have such a policy if they owe mortgage payments," he adds.

Mason is considering enrollment in the NEA Home Protection[R] Plan, a mortgage life insurance plan that he says is "very reasonably priced."

"In this day and age," he notes, "I don't think you can have too much life insurance."

The Experts Say:

If you don't have enough life insurance to pay off the mortgage and take care of your family's immediate needs, mortgage insurance may be a good idea.

The term "mortgage insurance" can be misleading, because it can mean two very different things.

Private mortgage insurance, or PMI, doesn't protect your family in any way. It's something the bank gets--and then passes the cost on to you--to protect itself if you're making a down payment of less than 20 percent on a new home. The kind of mortgage insurance that protects your family is actually a type of term life insurance that will pay off the outstanding balance on your mortgage if you die.

You can buy this kind of policy when you take out a first mortgage or refinance, or at any time during the life of your loan, as long as your payments are current.

Mortgage insurance can be expensive, and, like any life insurance, the cost increases with age. A 35-year-old with a $100,000 loan would pay about $35 a month, a 45-year-old would pay about $80 a month, and a 65-year-old would pay a monthly premium of about $395.

Despite its high costs, experts generally agree that mortgage insurance can be appropriate for people who don't have regular life insurance or who need additional coverage.

There are several things to keep in mind when deciding whether to purchase a policy:

* Mortgage life insurance has what's referred to as a "declining benefit," which means that its value decreases over the years, as the amount needed to pay off the mortgage decreases. In contrast, the value of a conventional term life insurance policy will stay the same.

* With a mortgage life policy, insurance benefit must go to pay off the mortgage. With a broader term life policy, you can use the money any way you want.

* Because the insurance is tied to your mortgage, the policy ends when you sell your home. If you take out a new policy on your next home, you'll be older and your premium may be higher.

* Don't automatically buy the mortgage insurance that your lender offers. Contact several insurance companies to compare costs and benefits.

Resources

You may already have some life insurance, but, if you were to die, would it be enough to cover major obligations like the mortgage or a college fund--and maintain your family's day-to-day standard of living?

The NEA Home Protection[R] Plan is the smart way to get the extra life insurance coverage you need to help secure your family's future.

As an NEA member, you can get flexible coverage ranging from $10,000 to $300,000 (depending on your age) and affordable group rates.

With the NEA Home Protection[R] Plan, you can custom-tailor a plan for your specific needs--without paying for coverage you don't need.

For more about this plan and other NEA life insurance options, call NEA Member Benefits at 800/637-4636.

RELATED ARTICLE: Continuing On

I enjoy exploring the Internet, but I'm hesitant to make online purchases because I'm concerned about my privacy. What can I do to protect myself?

Whether you want to avoid unwanted solicitations or prevent personal information from being misused by scam artists, there are some things you can do to protect your privacy online. The Online Public Education Network (Project OPEN) suggests that you:

* Protect your password. Never divulge it to strangers, and choose a password that would be hard to guess. The safest passwords are those that mix letters and numbers, that contain at least six characters, and that don't represent a word in any language.

* Recognize that when you post messages to an online bulletin board or participate in a chat session, you may be making your E-mail address available to strangers.

* Know your service provider's policies and exercise your options to control how your personal information will be used. Ask your service provider if it shares its customer list with other companies.

* Take advantage of new software that protects privacy--for example, that allows you to block children from typing in personal information.

For a free copy of Project OPEN's brochure, Your Privacy When You Go Online, call 800/466-OPEN. Or, visit Project OPEN on the Web at www.isa.net/project-open.

Retiring Soon?

Thinking about retirement? Don't forget that membership in NEA-Retired offers you a continuation of Association activism, benefits tailored to your needs as a retiree, plus workshops, conferences, and volunteer opportunities.

You'll also receive NEA Retired magazine, a bimonthly publication covering Association news and the latest on Social Security, pension, and health issues--as well as feature articles on NEA-Retired members around the country.

Join now as a pre-retired member. Contact NEA-Retired, 1201 16th St., N.W., Washington, DC 20036. On the Web at www.nea.org/retired.
COPYRIGHT 1998 National Education Association of the United States
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1998 Gale, Cengage Learning. All rights reserved.

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Publication:NEA Today
Geographic Code:1USA
Date:Nov 1, 1998
Words:980
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