Mortgage life insurance works similar to a traditional life insurance policy.
With mortgage life insurance you pay a premium to an insurance company and a death benefit is paid by the insurance company to the beneficiary of the mortgage life insurance in the event the insured dies during the life of the policy.
There is one big difference between traditional life insurance policies and mortgage life insurance - the structure of the life insurance policy death benefit.
Traditional life insurance policies feature a level death benefit for the life of the policy along with level premiums for a specified term - 10, 15, 20 or 30 years (or guaranteed forever).
Mortgage life insurance features level premiums each year, but have a decreasing death benefit - much like how a mortgage works (hence the name). So, the amount of the coverage would decline each year, in line with your decreasing outstanding mortgage loan.
However, many people choose to buy level term life insurance for a term of 20 or 30 years, to protect their home mortgage loan.
Learn more about life insurance on a mortgage.
With mortgage life insurance you pay a premium to an insurance company and a death benefit is paid by the insurance company to the beneficiary of the mortgage life insurance in the event the insured dies during the life of the policy.
There is one big difference between traditional life insurance policies and mortgage life insurance - the structure of the life insurance policy death benefit.
Traditional life insurance policies feature a level death benefit for the life of the policy along with level premiums for a specified term - 10, 15, 20 or 30 years (or guaranteed forever).
Mortgage life insurance features level premiums each year, but have a decreasing death benefit - much like how a mortgage works (hence the name). So, the amount of the coverage would decline each year, in line with your decreasing outstanding mortgage loan.
However, many people choose to buy level term life insurance for a term of 20 or 30 years, to protect their home mortgage loan.
Learn more about life insurance on a mortgage.
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