Life insurance provides financial assistance for your family after your death. With it, your family can pay your final expenses, repay debt or save for college. It’s also beneficial for repaying the mortgage, which allows your family to stay in their home. As an alternative to a term or whole life insurance policy, consider mortgage life insurance that’s designed specifically to pay off your mortgage. Learn the pros and cons of this life insurance option before you buy it.
What is Mortgage Life Insurance?
Mortgage life insurance pays off your mortgage if you die, become disabled or contract a life-altering disease that prohibits you from earning a living. When you fill out your mortgage paperwork, you will be given the option to apply for mortgage life insurance. If you decline it, you’ll have to sign several waivers that verify you are opting out of the coverage.
Advantages of Mortgage Life Insurance
As with all insurance policies, you will find several advantages of mortgage life insurance.
- You give your family peace of mind when you purchase mortgage life insurance. With it, they won’t have to struggle to pay for their home.
- No medical exam is required. Preexisting medical conditions may prevent you from qualifying for traditional life insurance, but you can buy mortgage life insurance regardless of your health.
- This coverage kicks in even if you don’t die. Traditional life insurance policies only mature when the policy holder dies. Mortgage life insurance is activated when you suffer an illness or injury that prevents you from working.
Disadvantages of Mortgage Life Insurance
There are advantages to mortgage life insurance, but weigh the cons, too, as you make an informed decision for you and your family.
- A term life insurance policy may be cheaper than mortgage life insurance. Research your life insurance products and options as you make the best choice for you.
- Mortgage life insurance covers only the mortgage. Your family cannot decide how to use the money, which they may need repay debt, afford college or cover everyday living expenses.
- The benefit decreases over time as you pay off your mortgage. Because mortgage life insurance pays off your mortgage, you won’t need as much coverage as your mortgage principle decreases. A traditional life insurance policy keeps its value for the term of the policy or as long as you pay the premiums.
With this list of pros and cons, you can decide if mortgage life insurance is a wise investment for your family. Talk to your insurance agent about your family’s financial needs as you choose the best life insurance option for you.
