For example, our house is $180,000 and I die in 10 years and the mortgage loan balance is $80,000 then my husband still gets the original $180,000. He can use this to pay off the mortgage plus have money left over to use as he decides.
Mortgage Insurance names the lender as beneficiary.
The lender is the one who gets paid. That's the point of mortgage insurance.
I'm not talking about homeowners insurance, I'm talking about decreasing term life insurance, where the mortgagee gets paid off, if you die. Only the mortgage balance gets paid. Only the mortgagee gets paid.
Mortgage insurance, is another name for "decreasing term life insurance".
The premium you pay, stays the same, for the whole term - just like term life insurance. But, the coverage amount goes down each year. Every time you make a payment on your mortgage loan, you owe a little bit less.
Plus, mortgage insurance costs more than term life insurance. So, on average, you pay a lot more, for less and less coverage each year.
If you die the month before the house is paid off, you're entitled to one mortgage payment.
Worst of all, it's not even you who gets it - it's your mortgage lender.
If you want life insurance, buy real life insurance that will pay your spouse if you die. If you buy $180,000 of coverage - probably at about the same cost as that decreasing term policy - and you die in 10 years, term life insurance will pay your husband $180,000.
He can pay off the mortgage with some, and use the rest of the proceeds from the term life insurance policy to pay taxes, utilities, food, daycare, whatever else is needed.
If you buy the mortgage insurance, the lender gets paid, and your husband gets nothing.
Here's how you can learn more about mortgage life insurance and how it works.