What is Mortgage Life Insurance?

What is Mortgage Life Insurance?

Ans: The term mortgage life insurance refers to a form of coverage where you have a repayment mortgage in place. This type of coverage is specifically designed so that you will have a lower amount of coverage as you pay down the balance on your mortgage. If you should die at any point, the dollar amount of the mortgage life insurance payout would be equal to what you owe on your mortgage.

As the amount of money that is associated with the policy continues to drop, the cost of the premiums will decrease as well. Many people refer to it as low cost life insurance for that reason. Many people don’t realize that terminal illness insurance coverage also is included with a mortgage life insurance policy. This means should you be diagnosed with any terminal illness where you have 12 months or less left live you will get a lump sum payout.

If you are paying an interest only mortgage though then mortgage life insurance isn’t a good idea. In such cases your best choice would be to have level cover life insurance. All joint policies that are to do with mortgages are part of a first life basis. This means that if either of the people on that policy should die there will be a payout made. Once the payout has been made after the death of one person on the policy, it is terminated. There won’t be another payout when the second person dies. When a mortgage is held in both names then both people will need to get such coverage.

It is a good idea to think about getting coverage in regards to your monthly mortgage payments too. If you can’t work from some reason such as an accident or even being unemployed then this will help you to keep up your monthly mortgage payments.

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