Mortgage Life Insurance
Mortgage life insurance is a policy that will cover the remainder of your unpaid mortgage debt plus any interest, in the event of your death during the life of the policy. This will keep your family covered from your mortgage debt, enabling them to either remain in the house or, if desired, sell the property for financial gain. Most premiums can be included in your mortgage payment, which makes this an easy and affordable option.
This type of insurance is usually available as a single or joint policy, with coverage available on the first claim only. You can choose the number of years that the policy will be in effect and the level of coverage that you need. In some cases, the premiums will decrease as the mortgage decreases. A terminal illness benefit can be added at an extra cost, which will pay the mortgage in the event the policyholder is diagnosed with a life-threatening illness or condition, usually conditional to one year. The cost of the premium is based on the age at which you purchase the policy, and does not increase as years go by. Like term life, upon the expiration of the policy, if no claim has been made then the policy pays nothing, as it has no cash value.
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Should You Buy a Mortgage Life Plan?
Many experts say that purchasing mortgage life insurance isn’t worth your while, mainly because there are other things that need to be taken into account as well as a mortgage, and therefore it is better to consider your overall financial needs. However, in some instances, such as poor health conditions where you would either pay higher premiums or be disqualified, then mortgage life may be the best option. In that case, it is best to check the policy carefully for any restrictions as far as health and pre-existing conditions that would limit any payoffs.
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