Mortgage Life Insurance Definition
Mortgage life insurance, or mortgage insurance, is meant to pay off the policyholder’s mortgage in case of death and, on some policies, may cover payments during a period of critical illness or disability.
If you are looking at purchasing mortgage insurance, it’s a good idea to purchase optional critical illness and disability coverage. Being able to pay mortgage payments if you or your spouse are out of work for an extended period of time will give you peace of mind and extra money for other expenses during this period.
Example
John and Mary are in their forties and have about five years left on their mortgage. John dies suddenly from a heart attack. Since they got mortgage life insurance about ten years earlier, the remainder of the mortgage is covered by the insurance.
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Mortgage life insurance Tips from First Foundation
When should you get Mortgage Life Insurance?
Mortgage life insurance makes more sense if you are at the beginning or middle of a mortgage, or if you believe that the total benefit provided by your life insurance will not be enough to cover the your current mortgage balance. In many cases, a larger insured amount on a life insurance policy will be enough to cover the remainder of a mortgage on your home.
Why you Want Mortgage Life Insurance From an Insurance Broker
When you purchase mortgage life insurance from a bank, you are essentially purchasing a product from the same company that is holding your mortgage. There are many reasons why this isn’t the best option, the largest being that a proper mortgage life insurance policy usually involves medical questions that may trip up your beneficiaries at claim time if the application process isn’t handled properly by an insurance professional.
In the event of death, having an insurance broker helping out your beneficiaries with the claim will minimize their involvement with the paperwork and having to deal directly with the insurer at such a difficult time.