Mortgage Protection Life Insurance

Posted in Life Insurance , Life Insurance Riders

April 2nd, 2009

Many people have concerns about what will happen to the balance of their mortgage in the event of an untimely or accidental death. With mortgage life insurance, your mortgage will be covered and your family will have one less thing to worry about in the event of your untimely demise.

There are two basic types of mortgage life insurance that you can purchase: decreasing term insurance, and level term insurance. The type you choose will depend largely on what kind of mortgage you have.

Decreasing Term Insurance

Decreasing term insurance is mortgage protection life insurance for homeowners who have a standard repayment mortgage. Under the terms of a repayment mortgage, the balance on your loan will decrease over the term of the loan as you make payments against the principal. Since the balance due on your loan will go down over time, the sum of benefits needed to cover this amount will also go down along with the mortgage balance. This type of policy has no surrender value, and it will expire at the end of the term of the mortgage if you have repaid the entire amount. However, it is a good way to protect your home over the term of your mortgage.

Level Term Insurance

Level term insurance is for homeowners who are making interest-only payments on their mortgages. With this type of mortgage protection life insurance, the benefit payout remains the same over the term of the policy because the principal balance will also remain the same over the term of the mortgage.

Your house is possibly one of the biggest investments you’ll ever make, and it’s where your family has made their home. Thats why it’s vital to have a good mortgage protection life insurance policy in place in the event of your death. Talk to your insurance agent or compare policies online to find the best mortgage protection life insurance policy for you.