Mortgage Life Insurance
What is mortgage life insurance?
Mortgage life insurance (a.k.a mortgage protection life insurance) is a financial product which guarantees that your mortgage will be paid off if you die while covered. Certain policies are designed specifically to decrease in value as the mortgage decreases, so you can cut costs on coverage.
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Mortgage life insurance vs. mortgage protection insurance
You may hear mortgage life insurance termed mortgage protection insurance or just mortgage insurance, but frequently, the latter two mean something different.
Mortgage insurance or mortgage protection insurance can refer to a form of credit protection insurance (not strictly life insurance) which a lender may actually require you to buy before giving you a mortgage. Credit protection insurance has a bad rap because it is imposed on the buyer (you) and because its intent is not to protect your family but to protect the finances of the lender.
Mortgage life insurance yields roughly the same result as mortgage protection insurance: the lender gets his/her money and your family is not forced out of its home. However, mortgage life insurance is completely voluntary, and that freedom allows you choose the best coverage for your circumstances.
Types of mortgage life insurance
There are life insurance policies sold specifically as mortgage (or credit) life insurance policies. The death benefit of such a product decreases in accordance with your decreasing mortgage (or other debt) so that the death of the beneficiary will, at any time, result in a payment exactly large enough to cover the debt.
Having a decreasing death benefit may make mortgage life insurance less expensive than ordinary term life insurance (where the death benefit is just as high at the end of the policy as it is at the start). But mortgage life insurance's inconstant death benefit can actually impose an administration cost that offsets the money saving. Check with your agent as to whether credit life insurance or term life insurance is more affordable for your situation.
Really, you can use any type of life insurance to cover a mortgage, so pick what works best for you. See "Mortgage Life Insurance Options" or "Types of Life Insurance" for more information.
How to buy mortgage life insurance
If you want to use term life insurance for your mortgage protection, use our online life insurance quotes form and compare prices from competing life insurance companies. It's free and it's instantaneous.
If you want to use mortgage insurance with a decreasing death benefit, work with one of our helpful advisors over the phone: (800) 823-4852.
