Protecting your life with mortgage insurance is very important to help manage unexpected life events. Insurance protection for both life and disability is yet another cost when purchasing a home however how does one plan on paying the mortgage if one was to die and leave a spouse behind to deal with everything. Most people focus on just the cost and think nothing will ever happen. If the cost to protect your family with low-cost mortgage life and disability is too much when one is working. How will they handle making a mortgage and property tax payment when one of the income earners is gone or disabled.
Life Insurance VS Mortgage Insurance
Life insurance is there to provide a financial cushion for your loved ones when one passes away. Mortgage insurance is really a debt payment. It is there to pay off the remaining mortgage balance, thus allowing one to use life insurance to help float the family and adjust to the new normal.
Mortgage insurance premiums are typically higher than those of term life insurance. Mortgage insurance premiums also increase with age as there is no personalized risk assessment on your life.
If you have mortgage life insurance and sell your home or refinance down the road – you have to start from scratch and purchase a new mortgage insurance policy. If you have a term life insurance policy, it doesn’t matter which mortgage lender or balance you have, it moves with you and doesn’t change.
Your Coverage is Consistent and Guaranteed
As your mortgage balance is paid down, unfortunately, your mortgage premiums do not change. The premiums remain the same no matter what your balance is to be paid off. With term insurance, your premium is based on your coverage amount, your age, your health and overall risk and has no bearing on what mortgage balance needs to be paid off.
Choose your Beneficiary
Term life insurance pays out the beneficiaries of your choice, most often your family. Mortgage insurance pays out the mortgage lender. Having your mortgage paid off is beneficial to your family however having a set term life insurance where the coverage amount you pay for is actually paid out upon death.
Quite often you can either take both coverages or have a higher life insurance policy to cover both the mortgage and your family. At the end of the day, protecting your loved ones is the most important thing when an unexpected life event happens. If you wish to learn more, I can help direct you to a qualified life insurance professional