Mortgage Life Insurance
September 1, 2009 |
Featured
For most people, their home is the biggest investment they will ever make. If you have other people, like your family, who depend on the mortgage, then an ideal safety net for protecting their security is Mortgage Life Insurance. This form of insurance is a term policy (there is no cash value built up), and the purpose of it is to cover the cost of your mortgage if you should die an untimely death.
In addition to your mortgage being your biggest investment, it is also, in terms of financial commitment, the longest. A number of things can happen over the term of the loan. By the end of your financial commitment on your mortgage loan, your financial situation, health and your home’s value will all have changed. Mortgage life insurance provides your family with the long term protection that it needs.
There are several ways that you can sign up for mortgage life insurance. Sometimes real estate companies and banks sell mortgage like insurance plans. It provides them with security that is to their benefit, so many times they offer it as something extra at the time that you are closing your loan. In the majority of cases, your benefits will decrease as the principal on the loan decreased. Your coverage is for the amount that you own on your mortgage. However, the cost of the premium remains the same over the life of the life insurance policy.
You can also obtain mortgage life insurance from an insurance company. Usually this is more advantageous than obtaining a policy from a real estate company or bank. One advantage is that usually the amount of the benefit remains the same instead of it decreasing, although it depends on the policy. Another difference is when you buy a policy through an insurance company is that you usually can choose who you want your beneficiary to be. In addition, the beneficiary can make their own decision as to how they will use the money. When you purchase mortgage life insurance from another source, usually the mortgage owner is names as he beneficiary.
In terms of conversion options, insurance companies normally offer mortgage life insurance that has a pre-defined option to change the payment and coverage in the future, without regarding health conditions and age.
Sometimes policies for mortgage life insurance don’t guarantee the premiums. With an insurance company, you usually have options for setting a variable or defined premium.
When you buy your mortgage life insurance through a real estate company or bank, you will end up losing the policy if you decide to refinance with a different lender, since the lender is the beneficiary on the policy. This could cause problems for you if your health status has change since the time that your obtained your policy. If you have poor health it may be almost impossible to get a new policy. However, with an insurance company, they often provide you with the option of keeping your same policy when you refinance or switch lenders.
Mortgage life insurance can be a great idea for many home owners because of the fact that it is a term policy with a discounted rate. It is secure for both your family as well as you. When it comes to owning a home, few homeowners can guarantee that they will be stable for 30 years. Mortgage life insurance provides homeowners with security. Families won’t have to worry about losing their home if something such as an untimely death happens.
Contact your insurance agent to see if mortgage life insurance is something that would benefit you and your family.
Tags:
