Do you still owe money on your home mortgage loan? If you are still working on paying off your mortgage and you are worried about whether or not your family will be able to pay off the home after your death, you may want to consider purchasing a mortgage life insurance policy.
How Does Mortgage Life Insurance Work?
When you purchase mortgage life insurance, the amount of the coverage will be equivalent to the amount you still owe on your mortgage. As this amount decreases, so will the benefit amount of the policy. Still, the amount of coverage is always equivalent to the amount that is still owed on the mortgage loan.
Who Can Purchase Mortgage Life Insurance?
Anyone who has taken out a mortgage loan is eligible to take out a mortgage life insurance policy. It should be noted, however, that only the owner of the property who has taken out a loan can purchase one of these policies. Therefore, if you have a spouse whose name is not on the mortgage loan, he or she will not be able to take out mortgage life insurance.
Why Should I Purchase Mortgage Life Insurance Rather Than Decreasing Term Life Insurance?
While some people think that purchasing a decreasing term life insurance policy is the best way to keep their family home protected, purchasing a mortgage life insurance policy is actually the best and cheapest way to obtaining the coverage necessary. In fact, when you purchase a mortgage life insurance policy, you can purchase it for the full amount of time the mortgage will be in place. This way, you can be sure your family receives the full amount of the mortgage after you pass away rather than taking a guess at how much coverage will be needed.
Will My Premiums Increase of Decrease?
When you take out a mortgage life insurance policy, your premiums are determined at the time you take out your policy. In most cases, these premiums remain the same throughout the lifetime of your policy. Some insurers, however, will create a policy with premiums that gradually decrease as the amount owed on the mortgage goes down.
What if I Pay Off My Mortgage Before I Die?
If you pay off your mortgage before you pass away, you will not receive a benefit through your mortgage life insurance policy. For this reason, some consumer advocate groups have been critical of these types of policies. Still, if you are looking for a relatively inexpensive way to be sure your mortgage will be paid and your family home will be safe after your death, this type of policy may be just what you’re look for.