Mortgage Life Insurance

A mortgage life insurance (MI) policy can be described as a term life policy designed specifically for mortgage debt repayment and cost associated in case of the borrower’s demise. In other words, mortgage life insurance is designed to cover the mortgage balance if the policyholder faces hardships or expires. It allows the policyholder’s family to settle the mortgage and secure the home permanently in case the policyholder passes away.

Here are some factors that make this policy different from other life insurance policies:

• The death benefit is paid to the mortgage lender, where the beneficiary is mostly the mortgage lender
• The payout received is the balance of the mortgage

The term of the mortgage life insurance policy matches the mortgage. This means that the death benefit is most often reduced every year to correspond with the new amortized mortgage balance outstanding. It decreases as you continue to make mortgage payments.

Apart from this, borrowers of mortgage life insurance who are required to buy mortgage life insurance by lenders may also have to elect for permanent life insurance. This is needed to help you write down the name of new beneficiaries after the mortgage obligation/payment is settled.

For more information, talk to our insurance agent when buying mortgage life insurance. Our insurance agent can help you navigate the options and policies available from different carriers and find the right coverage.