Mortgage Life Insurance

November 10th, 2009 Leave a comment Go to comments

Mortgage life insurance is a form of life insurance that will cover the cost of the mortgage in the event of policy holder’s death so that his/her family doesn’t have to worry about paying it off without the aid of primary income. Buying a house is a big step in life, and it comes with greater responsibilities and liabilities. It is your responsibility to make sure that your loved ones will always have a roof over their heads. In the unfortunate event of your death, you wouldn’t want to have them worrying about paying off the balance of the mortgage without your wage. The insurance will pay a lump sum amount to match the outstanding mortgage balance.

There are are 2 major types of mortgage protection insurances – one that protects the beneficiary in the event of policy holder’s death; the second will protect the policy holder (not the family) from disability, unemployment or critical illness. The first kind is called the Mortgage Life Insurance and is the most basic form of mortgage insurance which will cover the life risk of the insured and pays out the benefits to the beneficiary. The second kind of coverage includes policies such as unemployment mortgage protection insurance, mortgage disability insurance and critical illness insurance. This type of protection can be added as a “cover” to the basic mortgage life insurance policy and will help policy holder protect the home in difficult times. Please refer to types of mortgage protection insurance article to understand more about various kinds of coverages you can choose from. You can get a similar coverage through other forms of insurance such as term or whole life insurance.

The rest of this article will focus on mortgage life insurance protection.

When considering purchasing mortgage life insurance, you must assess your level of need for the insurance. If you are elderly and fear that you may not have much longer to live, to ensure that your spouse can continue to pay the bills each month on their income, mortgage life insurance is a very viable option. If you are disabled and fear that your health is going to deteriorate fast, mortgage life insurance would help your family members pay off the remaining portion of the mortgage. For young and healthy workers that are paying their mortgage comfortably without worry, there really isn’t any need to purchase mortgage life insurance. If however, you fear you may lose your job or fall ill and become disabled, you may want to consider other types of mortgage insurance that fall under the umbrella of mortgage protection insurance. These include insurance types such as mortgage disability insurance and mortgage unemployment insurance. These will pay your mortgage if you should succumb to an illness or job loss.

You must remember when purchasing mortgage life insurance that the insurance company will not pay your family anything to help them pay the remainder of the bills. Sometimes this is unappealing to some families. Mortgage life insurance simply pays off the remainder of the mortgage and no more. This is helpful if your family has more than one paycheck coming in every month. You or your spouse may still be able to continue paying bills as normal without your paycheck every month. If this is the case, mortgage life insurance is a good idea. If however, there is only one paycheck coming in every month and you expect to have things be OK and run smoothly if you pass away, mortgage life insurance may not be sufficient and you might want to consider other forms of life insurance. In many cases, even with mortgage life insurance, the homeowners still have to sell their house because even with the help on their mortgage, they are still incapable of paying the remaining bills every month.

These kinds of policies generally have less stringent health requirements than a regular life insurance. If you are having trouble with getting a regular life insurance policy or asked to pay higher premiums because of you poor health conditions, you are better off buying mortgage life insurance policies. If you have special conditions, be sure to check the small print to make sure your pre-existing conditions are covered.

Mortgage Life Insurance Price Quote

Mortgage life insurance costs vary depending on the amount of your mortgage loan and on how much your mortgage is each month. For an average cost home that is anywhere between $150,000 and $250,000, you may expect to pay $50 to $100 a month in insurance premiums in US. A good “guesstimate” is about one half of one percent of your loan is your annual cost for insurance. There are various providers offering mortgage life insurance quotes online and you can compare the prices. Refer to mortgage life insurance companies to find a reputed company that offers price quotes. Research the insurance company to make sure it is a reliable company before you purchase the policy.

In the United States there are many insurance providers that will attempt to sell you mortgage life insurance. Always be wary of letters that come in the mail promising mortgage life insurance for a fraction of the cost that you’re used to seeing. Usually, if you’re interested in purchasing a plan, it is best to go through a financial advisor, a bank or a qualified provider than following something in the mail even though it may seem legitimate because it “comes with paperwork” and is endorsed by “XYZ Bank.” Some of the best known insurance providers for mortgage life insurance are State Farm, All State, Nationwide, and the NAA, or, National Agents Alliance.

Additional policy options and restrictions

You will have an option to choose Return of the Premium policies which return the all of your premium payments if you are alive at the end of the policy period. These kinds of options are available on term life policies also. So you can also choose a term life with return of the premium option instead of a specialized mortgage life insurance.

With anything you purchase, make sure to read the fine print. There are plenty of times that an offer that seems too good to be true is in fact just that. If necessary, go over it with an attorney or specialist at your bank so that you make sure you understand all of the terms and conditions within the insurance policy.

  1. Linda Sprowl
    July 2nd, 2011 at 21:46 | #1

    I’m interested in the mortgage life insurance. Can this take the place of homeowners ins or PMI automatically added to our mortgage payments?

  2. Marsha Westbrook
    April 25th, 2012 at 02:38 | #2

    I would like to have some information on mortgage life insurance and income protection insurance.
    Thank you
    Marsha Westbrook

  3. Monic Martin
    July 11th, 2012 at 01:25 | #3

    Please provide me more information on the mortgage payment protection plan. I currently have this through B of A and I am trying to refinance for a better rate through another company but they don’t offer the borrowers protection plan. I was advised I can shop outside the loan and get a similiar program at a good rate.
    I don’t anticipate any issues in my future but value my livelihood & credit so being extra precautionary is best for me at this time with this economy the way it is.
    Any suggestions would be greatly appriciated.
    I need some company names?

  4. jen
    August 29th, 2012 at 03:15 | #4

    please contact me as soon as possible about mortgage protection insurance can’t find a contact number thank you

  5. Martin
    November 1st, 2012 at 15:22 | #5

    @Linda Sprowl

    No, it cannot. PMI insures the mortgage for the LENDER, not you. This type of insurance insures the mortgage for you.

  6. Bill
    February 19th, 2013 at 07:09 | #6

    No. It is an entirely different thing. Homeowners insurance protects against destruction of your home by fire, etc. PMI or property mortgage insurance protects only your lender if you don’t make the payments. Mortgae life insurance pays off your loan if you die and is an excellent choice over simple term or whole life policies if you can’t be certain your survivors will spend benefits wisely. A scatterbrained spouse or emotionally upset survivor might blow the insurance money without paying off the house! It happens all the time. Mortgage life pays the lender direct and protects survivors in spite of themselves in many cases.