Your Bank Doesn’t Want You To Read About Mortgage Life Insurance
Several people take loans nowadays and it has become inevitable to buy a new home without taking a mortgage from the banks. Those who have taken mortgages usually take the mortgage protection life insurance offered by the lender or the banks. This coverage pays the mortgage if the borrower is ill, disabled, meets with an accident or passes away. Several people just take the policy from their lender but seldom inquire about the product, how it works, when the premiums increase and who get the money when the policy has to pay out.
This product is the Mortgage protection insurance or the mortgage life insurance. This is the life term insurance policy which is made specifically for homeowners who take loans to build or buy their home.
In Mortgage protection insurance plan, the face value of the plan is usually set to pay the complete loan amount in case the owner or the main bread earner passes away. So people who have taken a mortgage for their home can take out such policy which can be taken for the complete period of mortgage and the same term length. The insurance will cover the complete time period till the person pays off the mortgage.
There is a product offered by lenders which is known as the Decreasing Term Mortgage Protection Insurance. In this plan, the death benefit shall decrease continuously with the decrease in the mortgage balance outstanding and will only cover the amount of the mortgage that is owing. The borrowers choose this plan if they feel that no other expenses need to be covered.
There is another option called Level Term Life Insurance which will save you thousands over the life of your mortgage compared to Mortgage Protection Insurance offered by the lenders. With this policy the death benefit will not decrease even with the decrease in the outstanding loan amount. This is taken if the person wants to save money, leave money for their family and have the death benefit guaranteed to pay out.
People usually take mortgage amount as the face value for the insurance. They should also take care of several costs which need to be managed apart from the loan so the insurance amount should be higher than the loan amount to help the person in such cases. We can help you decide how much coverage you need. Learn more about mortgage protection insurance and Insurance Quotes. Stop by our site where you can find out all about an Insurance policy and what it can do for you.
Also published on Medium.