Does Bank Owned Life Insurance Work? 
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 does n'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 . 