Mortgage Protection Life Insurance
Mortgage Protection Life insurance helps your family pay off your mortgage and other debts once you are gone. Signing up for mortgage life insurance is an affordable way of ensuring that one’s family doesn’t suffer financially. The death of the person responsible for paying the home loan can result in torturous circumstances for those left behind. If the family is not able to pay back the home loan, the lender may foreclose on the property, leaving the grieving family financially stranded and homeless.
There is no other more important desire in life than to purchase a home. Most people buy a house when starting a family to give the most comfort to their children. When buying a house, losing it is the last thing anyone wants to think about. But according to research studies, many families lose their homes due to various reasons. These reasons vary from accidental fires and disasters to sudden financial needs. But the most common reason for losing a house is being unable to pay off the mortgage, due to the death of the borrower, or during an illness or disability. A Mortgage is the longest investment one makes in our lifetime. It just makes sense to protect it.
No one likes to think about death or illness, but it’s something that is destined to happen sooner or later. Some people die of natural causes, while others die due to accidents. One doesn’t always know if their family would be able to pay bills, let alone pay off the hefty mortgage premiums. Therefore, financial experts always advise homeowners to protect their income and family with mortgage life insurance.
Home Owner Mortality Statistics by Age
(Possibility of a person dying before paying off their 30-year mortgage obligation)
The above figures of young deaths seem as shocking as they should. Therefore, it is important to protect your family from unforeseen circumstances. Mortgage protection life insurance pays off the mortgage balance, providing family members a priceless peace of mind.
The mortgage life insurance program has several benefits, some of which are:
- Mortgage Life insurance pays off the entire debt upon the death of the insured.
- It helps pay off the property liability in case of a terminal illness.
- Mortgage life insurance also provides a temporary income when a person becomes disabled due to any accident or critical illness.
- The policyholder receives a refund for 100% of premiums paid in case he or she outlives the term of insurance.
- The application process is fairly quick and simple, and there is a NO medical exam option.
- The amount in the mortgage insurance coverage may exceed the mortgage balance. Therefore, there are extra funds to cover other living expenses.
Mortgage Protection Insurance vs. Mortgage Life Insurance
Both insurance policies provide similar benefits when protecting and securing your family’s future after your death. The insurance policies follow the same process where the policyholder has to pay periodic premiums to keep the policy active. However, both policies have many differences which can be studied as under:
- With mortgage protection insurance from the bank,The policy pays off the mortgage balance but the survivors don’t get any funds.
- On the other hand, Mortgage Life insurance pays the death benefit to a family member. The remaining funds can be used to pay other living expense
- Mortgage Protection Life insurance may be cheaper and provides more coverage than mortgage protection insurance from the bank.
- A mortgage life insurance plan also allows the buyer to purchase a 15,20, 25 or 30 year plan to protect the length of the remaining loan.
- Mortgage protection policies are not as flexible in case of nonpayment of premiums. On the other hand, mortgage life insurance offers a grace period of up to 60 days.
- Declining benefit is another factor that differentiates the two insurance types. in a mortgage protection policy provided by the lender, the death benefit declines as the mortgage balance decreases, while the premium remains constant. On the other hand, mortgage life insurance plans provides a level death benefit, regardless of the mortgage balance.
- Lastly, mortgage life insurance policies are portable which means if a borrower shifts homes or lenders, they can continue with the same policy. But mortgage protection insurance policies requires a new contract, and a new qualification process.
A mortgage is usually the biggest financial obligation a family must pay each month. Consequently, financial experts always recommend working out precautionary plans for paying off your home once the borrower dies, or becomes disabled. One can either opt for a mortgage protection plan from by the lender, which is limited to actual mortgage balance, or undertake a mortgage life insurance, which provides a constant death benefit through the life of the loan.