What Is Mortgage Protection Insurance
WHAT IS MORTGAGE PROTECTION INSURANCE AND TERM LIFE INSURANCE PERMANENT LIFE INSURANCE?
Mortgage protection insurance only pays out a benefit to cover your mortgage, not other expenses. A true mortgage protection life insurance policy has the lender / mortgage company as the beneficiary in case of the insured borrower on the loan Therefore, it is usually recommended that the insured designates a beneficiary where the insurance company will pay.
Another benefit of life insurance policy is to increase the amount of death benefit that will not only pay off the mortgage, but to assist the beneficiary with additional funds to help support the family after the death of the insured. Oftentimes, the best and least expensive option for the majority of new mortgage borrowers is to obtain a term life insurance policy for a set period of years, such as 10, 15, 25 and 30 years. If the insured begins to outlive the length of the policy, usually the life insurance company will allow the insured to convert over to a permanent life insurance policy, which will always result in a larger premium to the insurance company. Sometimes, the life insurance company may require new evidence of health, especially if the death benefit is increased.
A life insurance policy, either term life insurance or permanent life insurance, with a loved one as your beneficiary is more comprehensive and may or may not be used to pay off your mortgage or other financial obligations and/or to create an estate after the insured dies.
Mortgage protection insurance: use term life insurance to pay off a mortgage
Your home may be your family’s largest asset. And their largest financial responsibility. A mortgage protection insurance policy can help them remain in your home after you’re gone.
You can help protect your house and family with mortgage protection insurance with term life insurance or a permanent life insurance policy.
Term life insurance vs. mortgage life insurance
Both term insurance and mortgage life insurance provide a means of paying off your mortgage. With either type of insurance, you pay regular premiums to keep the coverage in force.
But with mortgage life insurance, your mortgage lender is the beneficiary of the policy rather than beneficiaries you designate. If you pass away, your lender is paid the balance of your mortgage. Your mortgage will go away, but your survivors or loved ones will not see any of the proceeds.
In addition, standard term insurance offers a level benefit and level premium for the term of the policy. With mortgage life insurance, the premiums may remain the same, but the value of the policy decreases over time as the balance of your mortgage declines.
For more information, talk to your insurance professional about mortgage protection and using term life insurance to pay off your mortgage after you are gone.
Mortgage protection is just one of the many benefits of life insurance.
