Let’s talk about mortgage life insurance – a subject no one really wants to get into until it starts hitting them in the face. However, without this type of coverage, life could be made more challenging financially for many people. The idea of mortgage life insurance goes like this: If a person with a home loan passes away their spouse or partner will continue making payments on their current house simply by changing the name on the title and policy. This way, they will not lose their house because they aren’t earning enough income to make payments.
What is mortgage life insurance and what is so great about it?
When it comes to protecting the mortgage life insurance is one type of policy that provides for those who are planning on buying a house so as to keep their home safe in the event of an unforeseen tragedy.
Mortgage life insurance is also used to protect not only your home but also your loved ones by having this in place, you will be able to ensure that they will still have a place to live if something were to happen to you or your partner and you could no longer support them financially.
Life insurance is something that many of us find to be a boring or unwelcome business. Often when we think of life insurance all that comes to mind are the death of another person, grief, and litigation.
However, life insurance is much more than just one’s last will and testament in front of an audience. It’s the fair and right thing to do for those who rely on you as a provider, not just financially but emotionally too. As such, it’s important that everyone considers what will happen to their loved ones if they were to perish unexpectedly.
Why do you need mortgage life insurance cover?
A mortgage life insurance policy lets you get a cash sum if you die before the end of the policy’s terms. This can help pay off your home mortgage balance, which is often a major expense depending on how much money you’ve borrowed to finance your house. This can protect your family who gets to keep the house after paying off the mortgage or sell it elsewhere without worrying about any outstanding balances that might remain attached to it if you were gone.
This is great because it means that your dependents will not have to worry about finding the mortgage repayments in the event of your death. As such, they can focus on grieving, remembering, and moving on with their lives knowing that they have a financial safety net in place as you’ve got it covered!
Life insurance follows mortality rates. If you are young and have virtually no assets to speak of – life insurance will be cheap for you. But as the years go by, with more responsibilities and assets, chances increase of you dying before paying off your mortgage – and the insurance premiums will stop at this point. If a younger person bought life insurance early into their mortgage, they will pay far less than an older person who is clocking up their 30s on the mortgage payment clock!
Mortgage life policies are available in a range of durations, and if you have a joint life policy, the amount is paid out on the first claim only. This type of policy is usually taken out for the same number of years as a mortgage, and it’s typical to also offer critical illness cover in addition to this type of plan, though you will usually incur an extra cost for that.
Critical illness insurance can pay out either on death or on the diagnosis of a specified critical illness (such as certain cancers, triple artery bypass) – whichever comes first. You should check with your chosen insurance provider as to what illnesses are covered, as they vary from insurer to insurer.
If your insurance policy is being paid out before the end of its term, it will cease. And if your policy is in force during the term, it will stand firm.
If you are looking for mortgage life insurance and want to make sure you see the best deals around, then don’t suddenly accept the first quote you get. Don’t take too long to shop around because that can mean you end up missing out on a good opportunity as prices may vary wildly from provider to provider. In this case, it’s wise not to settle on the first deal that comes along!