There are not many financial commitments as big as buying your first house. Once that decision has been made and the financing is completed the issue of mortgage insurance seems little more than an afterthought.

Certainly, compared to your mortgage payments the insurance premiums are tiny. I liken it to buying a new car and then springing for the undercoating and paint protection. After all, you've got to protect your new purchase. But there are a few things you should know before you sign up for that monthly premium.

Firstly, mortgage insurance is essentially a joint first-to-die insurance policy -- the death benefit is paid if either one of you die. But, unlike standard term insurance policies, the death benefit is a moving target. It is equal to your outstanding mortgage principal at the time of death (a constantly declining value), but the premiums do not decline over time. Thus, mortgage insurance becomes progressively more expensive as time goes on.

Secondly, any death benefits from mortgage insurance are paid directly to the lending institution to pay off the mortgage principal. You, as the consumer, have no choice in how these funds are used. The main purpose of mortgage insurance is to protect the lender, to ensure that the debt is paid off. One might argue that you could re-mortgage your home to provide emergency capital. However, borrowers must meet the lender's criteria for a new mortgage. If the surviving spouse does not have a job and the necessary income to make monthly payments, then a new mortgage may not be an option.

Finally, mortgage insurance typically has no convertibility options. With standard term insurance, you have the option of converting the temporary policy to permanent insurance without additional medical evidence. This is a very desirable feature, particularly for those who are stricken with a serious medical condition which renders them otherwise uninsurable.

Before you sign up for mortgage insurance, make sure you examine your options with your financial advisor. Individual life policies or a joint first-to-die policy are viable alternatives. They offer significantly more flexibility and control and premiums that are very competitive and often cheaper. This flexibility and control means it can be a more integral element of your financial plan. Be a good consumer; let us help you shop for your insurance.