Life Insurance That Covers a Mortgage

Are you a homeowner haunted by the thought of saddling your family with a mortgage if something happened to you? You're not alone.

Many people in their 30s to 50s share your concern about protecting their loved ones from financial hardship.

Thankfully, there’s a specific solution to this worry: life insurance that covers your mortgage loan.

Let's dive into what this entails and how it can fortify your financial planning.

Guide to Understanding Life Insurance That Protects Your Home Mortgage Loan

Quick Review

Life insurance for mortgage protection is a type of life insurance policy designed specifically to pay off the remaining balance of a mortgage in the event of the policyholder's death.

This ensures that the surviving family members or beneficiaries can retain ownership of the home without the financial burden of continuing mortgage payments.

The initial coverage amount is typically based on the outstanding mortgage balance at time of the purchase of your policy and the duration of your mortgage loan.

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Life Insurance for Mortgage Explained

Mortgage life insurance is a policy designed to pay off your mortgage balance if you pass away. The policy provides a lump sum to your beneficiaries, which can be used to pay your mortgage lender, ensuring your family can stay in their home without the financial stress of continuing mortgage payments

Level Term Life Insurance

Level term life insurance is the most commonly used life insurance purchased to provide your beneficiary (spouse, partner or family member) the funds necessary to pay off the remaining balance owed on your home mortgage loan, so your loved ones may remain in the home they shared with you.

Level term offers up to $2,000,000 or more of low cost life insurance protection for a duration (policy term) of 10, 15, 20, 25, or 30 years. This type of coverage is flexible, affordable and easy to understand. Get a FREE Quote.

How Life Insurance for a Mortgage Works

So, how does mortgage life insurance work?

It's actually quite straightforward. When you take out a life insurance policy for mortgage protection, the coverage amount is typically set to equal your outstanding mortgage balance, and the policy term (duration of coverage) is set to match the duration of your home mortgage loan.

If you die during the policy term, the beneficiary uses the death benefit to pay the lender the remaining mortgage balance.

Using a level term life policy for mortgage protection allows your beneficiaries to receive a lump sum to use as they choose, unlike a mortgage protection insurance  policy where the death benefit goes straight to the mortgage lender, term life insurance death benefits can cover a range of expenses, MPI is laser-focused on your home loan.

Since the term life policy may have death benefits that exceed the mortgage owed at the ime of your death, your beneficiaries can use the excess funds as they choose after paying off the mortgage loan. This offers more flexibility and is more beneficial to your beneficiaries.

Compare Life Insurance Plans

The next step for many is evaluating options. With so many providers and policies available, how do you choose?

Start by considering the types of mortgage life insurance: level term and decreasing term.

Level term keeps the policy amount steady throughout, while decreasing term gradually reduces coverage in line with your mortgage balance.

Keep in mind, level term is affordable and is the most common type of life insurance policy purchased (71% of all life insurance policies are level term according to a recent survey).

Coverage Amount and Pricing

Coverage amounts and premiums vary across policies. When comparing, take note of the premiums, which can depend on age, gender, health, lifestyle, tobacco use, and the loan amount, among other factors.

Remember, a lower premium isn’t always better; it needs to align with your financial situation.

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Financial Planning

Financial planning is crucial. Adding life insurance to cover your mortgage could be a cornerstone in your financial strategy.

Imagine your family's relief knowing that, in your absence, they won't have to worry about making mortgage payments. This peace of mind can be invaluable.

Consider Reviews and Ratings of Insurers

Numerous reputable providers offer mortgage life insurance, from household names to specialized insurers.

Checking reviews and ratings can be a good start. Websites like the National Association of Insurance Commissioners (NAIC) provide reliable data on company performance and customer satisfaction.

Cost of Coverage

Cost estimation is next. According to the Insurance Information Institute (III), the average cost of mortgage life insurance can range from $30 to $100 a month, depending on your coverage needs and personal factors. To get a precise quote, you'll need to provide some personal and mortgage details to insurers. Start Your FREE Quote.

Application Process

The application process is relatively straightforward. You’ll need to fill out an application form, provide details about your mortgage and health, and possibly undergo a medical examination. The insurer will use this information to set your premiums and finalize the policy terms.

There are instant issue term life insurance policies that offer up to $1,000,000 of coverage for people ages 18 to 65 with no medical exam needed, if you would rather not have to take a health exam to purchase your mortgage life insurance policy. Get a FREE Quote.

Peace of Mind

If you’re still on the fence about purchasing mortgage life insurance, consider your family's future. Ensuring they won’t be displaced from their home offers significant peace of mind. Plus, integrating this type of coverage into your financial planning can make your overall strategy more robust.

Example of Life Insurance to Cover Mortgage

Take Jane, a 45-year-old homeowner with two teenagers and a $250,000 mortgage.

She was worried about her kids having to move if something happened to her.

After consulting with a financial advisor, she opted for a level term mortgage life insurance policy. Jane now sleeps easier, knowing her children's home is secure.

Compare Rates

Ready to choose the best policy?

Start by comparing life insurance quotes from various providers. Use online comparison tools to assess rates from multiple insurers quickly.

Policies with level premiums might be appealing, offering fixed rates throughout the term, helping you budget better.

Eligibility Factors

Ensure you understand the eligibility criteria. Many policies start to decline applicants past a certain age, usually 65.

Health conditions can also affect your eligibility and premiums. Being aware of these factors can help you choose the best time to apply.

Free Look Period – No Risk

Consider any additional benefits, like policies that offer a free look period, usually from 10-30 days. During this time, you can review the policy details and cancel if it doesn’t meet your needs, without financial penalty. Understanding these terms can save you from future headaches.

Consider Your Budget and Needs

Once you've gathered all the information, make an informed decision. Choose a policy that fits your budget, coverage needs, and family’s priorities. Remember, the cheapest option isn’t always the best–consider the comprehensive value each policy offers.

Get Started Today

Finally, taking the next steps involves contacting insurance providers, requesting quotes, and starting the application process. Embark on this journey with confidence, knowing you've done your homework to protect your family's future.

Summary

Life insurance that covers mortgage loans is more than just a policy; it's a safety net for your loved ones. Providing protection against your home loan burdens, it ensures your family remains in their home, securing their future. To get started, consider requesting a free quote today and take one step closer to peace of mind.

Shop and Compare Life Insurance Quotes

Top Pick – JRC Insurance Group

JRC Insurance Group helps you shop, compare and save on life insurance. Regardless of your age or health background, we'll shop our 63 top life insurance companies and find you affordable life insurance you need to protect your family and fit your budget. Compare the best life insurance rates for savings up to 73%. Get Your FREE Quote.

Highly Recommended – Quility (Underwritten by SBLI)

Instant Issue Mortgage Term Life Insurance is revolutionizing how people secure their future. With no medical exam required, you can apply online and get approved in as little as 5 minutes. 

This type of insurance, underwritten by SBLI, which has been rated A- Excellent for financial strength, allows you to buy up to $1,000,000 in coverage and start immediately. 

Established in 1907, SBLI has a long history of reliability. 

Applying is quick and easy — just click the link to start your application. Get covered fast and protect your loved ones without the wait.