Mortgage Protection Insurance

Mortgage Life Insurance

One of the major expenses that you want to protect your spouse from after your death is the remaining mortgage payments. Following your death, the loss of your income can cause considerable financial stress, with mortgage payments topping the list of outstanding debts to pay. Life insurance is an effective way to plan for your family's financial security. In the event of your death, your spouse and dependents will receive the death benefit, tax free. This payout can be applied to a variety of expenses, including mortgage payments.

Mortgage Life Insurance Basics

"Mortgage life insurance" is designed specifically to provide financial security to the lender for mortgage payments after you die. With this type of insurance, you pay a premium that remains at the same rate during the life of the policy. In the event of your death, the policy pays off the remaining mortgage payment.

As with other types of life insurance, factors such as age, health and smoker/non-smoker are considered to determine the premium rate. An article from Insurance.com provides the following example and explanation: "A policy covering a mortgage of $100,000 will cost about $50 a month for a 40-year old non-smoker, depending on what state you live in. The "death benefit" in this case is the outstanding balance on your mortgage. So, if you take out a large mortgage initially, your premiums will be higher. As you pay your mortgage off, the amount your policy pays off goes down. Even so, your policy premiums remain the same because the payments have been calculated with the decreasing death benefit in mind."

Drawbacks to Mortgage Life Insurance

One downfall of mortgage life insurance is that it is very specific, meaning that the payout at your death can only be applied to the balance of your mortgage. Since your family will have a number of outstanding debts and expenses to pay for, you may want to consider a more flexible option. A standard life insurance policy may be a better alternative over mortgage protection insurance. You may want to consider a short-term term life insurance policy to provide adequate coverage to your family while allowing them the flexibility to make choices about where the proceeds are applied. There are likely to be additional expenses and debts that the death benefit can provide for - including education, childcare and saving for a college education. Visit the free online quote system for a comparison of costs for a variety of life insurance offerings.

Is Mortgage Life Insurance the Same As Mortgage Protection Insurance or Private Mortgage Insurance?

No. Mortgage protection insurance and private mortgage insurance provide protection to your lender. Should you default on your loan, your lender will be protected by the insurance policy. However, mortgage protection insurance and private mortgage insurance do not protect you or your family in the event of your death. While private mortgage insurance is important because it allows lenders to offer you a loan even if you do not have the standard 20% down payment available, it does not protect you or your loved ones against repossession of your home should you be unable to make payments. In order to provide full protection for your family, you must purchase a mortgage life insurance policy.

Many lenders include the price of a private mortgage insurance or mortgage protection insurance policy in your monthly payments. However, you should not confuse this with protection for you or your family. When reviewing your loan policy, you should find out whether mortgage protection insurance is included, and even if it is, you should look into a mortgage life insurance policy to make sure your family is completely protected.

u also can usually add in option benefits such as return of premium, accidental death benefit, and waiver of premium. If you choose the return of premium option, you will get a full refund of the total premium you paid in the event the term expires before you pass away.

Finding the right term policy at the right price that gives you piece of mind

Fill out the term life insurance quote form below, and we will contact you with quotes from the top 15 life insurance providers. We can usually email these quotes to you within minutes of you submitting the form.

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