Mortgage Life Insurance
Anyone who has a mortgage should have mortgage life insurance. This is insurance that covers the amount of the mortgage if you should happen to die before the mortgage is paid in full. The insurance company that holds the policy will pay off the unpaid balance of the mortgage so that your loved ones won’t have to worry about coming up with the monthly payments when they no longer have your salary to rely on.
Mortgage life insurance is a low cost way to get the protection you need against one of the largest investments and financial obligations you will probably ever make in your lifetime. With this type of life insurance, you are covered if you suffer from a terminal illness, if you are in an accident and cannot work of if you should happen to pass away. The insurance will pay up to $500,000 of your outstanding balance, but will not pay any payments for which you are in arrears. It will also pay up to five years of accrued interest and any taxes that may be owing on your account. With the benefits you receive from having this insurance, you should not take a chance on being without it.
The coverage for mortgage life insurance starts from the date your mortgage is approved. The cost of the premiums depends on the amount of money you borrow and your age when you apply. The premiums are set for the life of the mortgage and will not increase each year while you are repaying the loan. If you and your spouse get joint mortgage life insurance, you may even qualify for a discount.
The premiums for this insurance are included as part of your mortgage payment, so you don’t have to worry about having to make an additional payment each month. It is very rare to be refused such an insurance and you are eligible to apply as long as you are between the ages of 18 and 65. You will only have to answer a few health-related questions on the application form, but you do need to apply within 30 days of having received the loan for your home.
You can apply for mortgage life insurance through the bank that approves your mortgage. Some people find this much easier than having to look for an insurance company that deals with this type of policy. The major disadvantage with getting the insurance through the bank is that the bank does own your policy. What this means is that you cannot specify a beneficiary for the policy because the bank is the beneficiary under these circumstances. As long as all that matters is that your mortgage is paid off, then this won’t make a difference.
It does make a difference who owns the insurance policy if you want to have the money come to a beneficiary who can invest the money and still continue to make monthly payments on the mortgage. This method of payout helps a family member make money on the amount paid out through the insurance policy long after the mortgage is paid in full.
If you have mortgage life insurance through the bank and decide to refinance the mortgage part way through the term or if you switch lenders, you will have to re-apply for the life insurance. If your health has deteriorated between the time of the first mortgage and the refinancing, you run the risk of being refused an insurance policy. This is something that you should be mindful of especially if you switch lenders. If you stay with the same lender, you may just be able to continue on with the original policy without having to make any changes in your health status
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