Affordable Life Insurance Protection for Your Family
If you are a home owner or just purchasing a home, you may be looking to buy life insurance to protect your mortgage.
Upon your death, the proceeds (death benefits) from your life insurance plan can be used by your beneficiary (spouse or family) to pay off the remaining balance owed on your mortgage, so your loved ones can stay in the home they shared with you.
Unlike private mortgage insurance (PMI) – which is required for loans with low down payments (less than 20%) and protects lenders from default – mortgage life insurance is designed to help pay off your outstanding mortgage balance if you die before the mortgage loan is fully paid off.
Some experts believe term life insurance may offer a better value for the homeowner when it comes to protecting your mortgage and family.
Term Life Insurance
Unlike some mortgage life insurance plans, a term life insurance policy can provide death benefits which can be used by your beneficiaries however they choose. Beneficiaries can pay off the balance owed on the home loan, pay off credit card debt, cover funeral costs, or use the money for any other purpose they deem fit.
Mortgage Life Insurance
A mortgage life insurance policy, however, pays off the bank (lender), not your family.
In addition, mortgage life insurance benefits typically decrease over time, as the amount you owe on your mortgage declines each year until the mortgage is paid off in the final year of your loan.
However, the insurer sets your annual premium at a fixed rate for the life of the home mortgage loan.
Term Life Insurance vs. Mortgage Life Insurance
Although you may decide mortgage life insurance isn't for you and your family, most homebuyers need some form of life insurance protection to protect the financial future of their family members.
If a family has been used to living on two incomes and they lose one income due to a death, they may not be able to keep up with the monthly mortgage payments. And, may end up having to sell their home, or go into foreclosure due to an inability to pay the mortgage.
How is Mortgage Life Insurance Priced?
Mortgage life insurance is priced according to the insurance company's risk of insuring the person’s life. If you have health problems, you will likely be charged higher premiums, or be denied coverage.
There are several risk factors that go into determining a rate for coverage, including the person’s gender, age, health, lifestyle, occupation, hobbies, tobacco use, driving record, among other things.
Offers of mortgage life insurance may play on your emotions by reminding you that your dependents may suffer financially if you are no longer around to provide for them.
Young adult homebuyers generally have smaller savings and often are most vulnerable to losing their homes to foreclosure if one spouse dies, leaving the surviving spouse unable to pay the monthly bills, including the mortgage loan.
Term life insurance policies aren't marketed as mortgage protection products, but they offer the same benefits and often at much better pricing.
Consumer advocates say there generally is no practical reason to choose a mortgage policy over a traditional term life plan. Get a free term life insurance quote.
How Does Life Insurance Protect a Mortgage Loan?
Mortgage life insurance is supposed to protect the borrower 's ability to repay the mortgage for the lifetime of the home loan.
This is in contrast to Private mortgage insurance, which is meant to protect the lender against the risk of default on the part of the borrower (homeowner).
What Does Mortgage Life Insurance Mean?
Mortgage life insurance is a form of insurance specifically designed to protect full repayment of the home mortgage loan.
If the policyholder were to die while the mortgage life insurance was "In Force", the policy would pay out an amount of money that will be enough to repay the outstanding balance owed on the home mortgage.
What Type of Life Insurance is Used as Mortgage Insurance Protection?
First-to-Die life insurance is another option for mortgage protection because it allows the full death benefit to be passed directly to the surviving spouse, giving him or her the opportunity to use the proceeds for paying off the mortgage, or whatever else he or she needs.
Term life insurance is another option – the homeowner could name his or her spouse as beneficiary, and upon death of the insured person, the death benefit payout if used to pay off the balance owed on the home mortgage.
Should You Buy Mortgage Life Insurance Protection?
Most mortgage insurance plans do not require you to take a medical exam to qualify for and purchase a policy.
If you’re denied term life insurance because of some pre-existing medical condition, mortgage life insurance may be an option to financially protect your home.
Mortgage life coverage also can supplement an individual life insurance policy. However, regular term life offers a better value in most cases.
Is Mortgage Protection Life Insurance a Good Idea?
Mortgage protection insurance could provide you with life insurance coverage even if you have health issues.
If you are unable to qualify for regular term life insurance, this kind of insurance can protect your family from the monthly cost of a mortgage payment if you die.
Do Homeowners Need Mortgage Life Insurance?
Mortgage protection insurance protects a homeowner's home by making sure he or she does not pass on the debt burden to survivors in the event of the insured's premature death.
The policy is usually structured in such a way that the death benefit pays the mortgage off completely.
From a life insurance standpoint, a regular term life policy is cheaper and is all that is needed to provide financial relief from the loss of an income earner in your family.
You don’t need a special type of policy just for your mortgage loan balance. Debt is debt. Just make sure you have enough life insurance coverage In Force for your family’s future financial needs.
Why Buy Mortgage Protection Life Insurance?
A mortgage repayment is the single biggest burden most families must deal with each month if the primary earning member passes away prematurely.
Even if the surviving spouse has a stable monthly income, making mortgage payments while taking care of the family’s needs can be an incredibly difficult financial task.
Life insurance serves its purpose in this scenario, and it is strongly advised to have a sufficient amount of insurance coverage In Force to provide for a loss of income and to pay all debts.
Can I Get Insurance to Pay Off My Home in Case of Death?
Most financial experts agree that the best way to provide funds to pay off the outstanding balance owed on your mortgage in case you die is to purchase a term life insurance policy.
The rates for these term policies are relatively inexpensive compared to all other life insurance products available, considering the amount of coverage that you can purchase.
In addition, the funds (death benefits) can be used by your beneficiaries for other purposes, if needed.
Term life insurance offers homeowners the most affordable way to protect their mortgage by providing life insurance lasting for a duration of up to 30 years to meet your specific mortgage protection needs.
If you and your spouse work, you may want to consider buying a separate individual term life insurance policy for both of you.
Make sure to choose an amount of life insurance that matches or exceeds the amount you currently owe on your outstanding mortgage loan.
Select the duration (term) of your policy that meets your specific mortgage loan duration of 10, 15, 20, 25 or 30 years.
Make sure to name your spouse (or family member) as the beneficiary so he or she may receive the death benefit and use it to pay off the balance on your home loan. That way, your family can remain in their home upon your passing.
Finally, make sure you compare multiple term life insurance quotes to help you find the most affordable policy from a highly-rated, financially secure insurance company.
Term Life Insurance Quotes
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Haven Life uses the information provided in your application to make an instant decision on your application. Healthy, qualified applicants (based on the information provided in your life insurance application) can be insured immediately with no medical exam while other applicants can receive immediate coverage pending a medical exam.
Applicants age 60-64 are eligible to apply for up to $1 million in coverage; subject to underwriting approval.
Some qualified applicants (U.S. citizens up to the age of 59) will be able to finalize coverage without the need for a medical exam. The majority of applicants are still required to take a medical exam.
Keep in mind: Issuance of the policy or payment of benefits may depend upon the answers given in the application and the truthfulness thereof.