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Mortgage Term Life Insurance

September 28th, 2009 by admin in Life Insurance, Term Life Insurance

Mortgage term life insurance is a life insurance product marketed to home buyers as a protection against defaulting on the loan and therefore, losing the house should the principle breadwinner die during the term of the insurance. As your mortgage is probably the biggest debt you will ever take on, it makes sense to have insurance to cover the cost in case of your premature death. As morbid as it may seem to contemplate one’s own demise, it’s a financially sound as well as responsible principle to carry life insurance once you have dependents.

A mortgage term life insurance policy is often a decreasing or reducing policy, meaning the benefit goes down as time goes on. This makes sense because your mortgage balance should also be going down as you continue to make payments. Sometimes, with decreasing term mortgage life insurance, the premium will also decrease, sometimes it won’t. A policy with a premium that stays the same is a level premium policy. A policy where the benefit stays the same is called a level benefit policy. You can get level premium, level benefit policies or level premium reducing benefit policies. Make sure you read the fine print and understand your policy before purchasing it.

As you collect quotes for mortgage term life insurance, you may notice that the premiums are more expensive than a typical term life insurance policy. This is because most mortgage term policies don’t require a medical exam, rather just a smoker/non-smoker classification. If you are healthy, it makes better financial sense to get life insurance with a medical exam, but if not, a no-medical exam policy will probably be cheaper for you.

An easy way to get lots of life insurance quotes to compare is to look online. Be sure to compare regular term life insurance with the mortgage term life insurance quotes you get. It is often cheaper and simpler to just get a term life insurance policy that will cover your mortgage and other bills as well as expected future expenses such as college tuition in the case of your death. A good rule of thumb for how much life insurance to buy is 10 year’s worth of income. Life insurance gives you and your family peace of mind that they won’t have to worry about finances, even paying off the mortgage should anything happen to you.

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Related posts:

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  5. Whole Life Vs Term Life Insurance

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