Should Your Life Insurance Policy Cover Your Mortgage

Your home is one of the biggest financial investments you and your family will make. For most homebuyers, the mortgage will last for many, many years, often decades. If you are the primary person responsible for paying the mortgage, what will happen should you pass away before the mortgage is paid off? Who will then become responsible for it? The act of paying the mortgage off may become a burden to your family. What’s the best way to cover these expenses?

You may have heard about mortgage life insurance as well as term life insurance. What makes these two types of insurance different, and which is the preferable one to invest in? While both types of insurance require a monthly payment, they are quite different in how your beneficiaries will receive any money that the policy offers.

Mortgage life insurance only pays off the mortgage of the house, and your beneficiaries will receive no other money from that policy. Often, the premiums are quite high on a mortgage life insurance policy. Sometimes people opt to choose a mortgage life insurance policy instead of a term life insurance one if they are in poor health and can’t otherwise get approved.

However, here is why many experts recommend getting term life insurance instead of mortgage life insurance: Generally, depending on your age and the condition on your health, the premiums are lower with term life insurance. In the event that you pass away before the mortgage is paid off, your beneficiaries will receive the money, and they can do what they want with it. Hopefully, your policy will provide enough money to pay off the mortgage and have extra money left over to help them cover other expenses.

Make an educated decision when purchasing life insurance. Find an agent who can sign you up for the best plan for you and your family.

Source: Nationwide.com

Article courtesy of Michael Fawver
License: NMLS #231944Sr. Loan Consultant
Prime Mortgage Lending
Phone: (562) 754-4744