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Mortgage Life Insurance Protects Your Investment

Mortgage life insurance protects the mortgage repayment of a property in the event of death of the owner. If a person dies while the mortgage is still unpaid, there is always the risk of losing the house if the deceased’s heirs are unable to fulfill the mortgage loan obligations. Mortgage life insurance protects the interests of the family of the borrower in case of his or her death.

Do You Really Need It?

If you are the sole working member of the family or contribute a major chunk of the family income, it is important for you to ensure that your family is protected from losing the house in case of your death. Mortgage life insurance allows you this security and relieves you of the constant worry about your investment and your family’s financial security.

Many mortgage life insurance policies come with the option of adding clauses to the main policy. These could include benefits for your family, accidental death cover, terminal illness cover and other such additional covers or benefits. Paying an additional small premium for these clauses in your policy can often make a lot of sense and should definitely be considered.

The thought of death is not pleasant at all, but if you think about it pragmatically, taking a life insurance policy means securing the future of your loved ones even when you may not be around to take care of them.

Types of Mortgage Life Insurance

Mortgage life insurance can be broadly categorized into two types:

  1. Decreasing Term Insurance
    This insurance is done for a repayment mortgage where the outstanding loan decreases over the period of mortgage. Thus, the amount of money for which the homeowner’s life is insured at any point of time is the remaining mortgage to be paid. This means that in the event of death, the policy will be just sufficient to pay the complete mortgage liability.
  2. Level Term Insurance
    Level term insurance cover is taken in case of a mortgage where the principal balance is constant throughout the term and the owner’s repayments only cover the interest on the mortgage. In level term insurance, the homeowner is insured for a fixed amount, which will be paid if he or she dies within the term of the policy.

Practical Aspects to Keep in Mind When Buying Mortgage Life Insurance

Whenever you decide to take a mortgage life insurance, you must consider both the type of mortgage you have and the risks that you wish to be insured against. You should also survey the market for the best deals and consider additional coverage and benefits offered in each policy.

It is generally a good idea to use an experienced mortgage broker to help you understand the terms of various policies and then choose the policy best suited for your situation.

Taking a mortgage life insurance is a smart choice as it will provide financial security for your family and peace of mind for you.