Mortgage life insurance is a product that has the potential to protect your friends and family members from any unnecessary mortgage debt when you pass away. This type of policy is often misunderstood, although it can be a worthwhile type of coverage to buy as a homeowner. Here are the basics of mortgage life insurance, and why you might want to consider buying it.

How it Works

The basic idea behind this type of coverage is pretty simple. You buy a mortgage life insurance policy by paying premiums just like you would with any other life insurance policy, mortgage life insurance calculator. If you pass away while the policy is in effect, the insurance company pays off your mortgage. Your spouse or beneficiaries can then live in the house debt-free without having to worry about making any mortgage payments.

Avoid Using Up Regular Life Insurance Benefits

Many people who already have life insurance policies may wonder exactly why they would buy mortgage life insurance. After all, their beneficiaries will already be receiving a large sum of money from the regular life insurance policy when they die. While this is true, and many people use benefits from regular life insurance policy to pay off their mortgages, others don’t want to use up the benefits. If you had a mortgage life insurance policy in effect when you died, your beneficiaries could use all of the benefits that they would receive from a regular policy for other things. The mortgage debt will be satisfied, and then they can use all of the money from the regular life insurance policy on other things. .

Easier to Get Approved For

Some people who want to get regular life insurance cannot get approved for a policy because of health issues. If you Can I get approved for a life insurance policy, you may still be able to get approved for a mortgage life insurance policy. Most of these policies are marketed by the mortgage companies and do not require the same underwriting requirements as regular life insurance policies. This means that if you have health problems, and a mortgage debt to deal with, it may be in your best interest to buy a mortgage life insurance policy. You’ll be able to at least get rid of your biggest debt for your family members when you pass away, even if you can’t give them any other money on top of that.

Declining Benefit

Although mortgage life insurance does provide some nice benefits, it does have a few potential drawbacks that you will need to consider. For example, one of the biggest problems with mortgage life insurance is that it has a declining benefit amount. The mortgage life insurance policy is only going to pay the amount of your mortgage balance. Since you are paying off your mortgage over time, this means that the benefit is going down. With most life insurance policies, the benefit stays the same or grows over time. With a declining benefit, you are actually getting less and less over time.

Extra Cost to Mortgage

For most people, their mortgage payment is the biggest payment that they have to make every single month. Most would agree that their mortgage is high enough as it is. If you are already paying more than you can afford to pay for your mortgage, you may not like to have to pay any more on top of that. With mortgage life insurance, your policy premium is typically added to your mortgage payment. This way, it can simply be deducted from your bank account every month when you make your mortgage payment. Although the premiums may not be that expensive, when added to your mortgage payment, it can seem like a lot to deal with.

Compared to Term Life Insurance

If you are interested in protecting your family from mortgage that when you die, it may make more sense to get term life insurance instead, but since all situations are unique you should learn more about mortgage insurance vs term life insurance. Term life insurance is often a better deal when you consider how much you are paying premiums compared to the benefit that you will receive. For the same amount that you’re paying for a mortgage life insurance policy, you could probably get a term life insurance policy that will pay off your mortgage, and leave some money to your heirs. If you are healthy enough to qualify for a term life insurance policy, it makes sense to get one. For instance, you could get a 30-year term policy that will cover your life for the entire term of your mortgage. This way, your family is protected from the debt.

If you are interested in finding out exactly how much term life insurance will cost for you, fill in the form at the top of the page. You can get a quote from a provider in your area right away.

Mozdex Insurance Advisors have helped thousands of families secure their futures with proper insurance planning since 1997.