Mortgage life insurance is insurance that can be purchase from a lending institution.
The insurance pays your mortgage in the event that you pass away. Mortgage life insurance is very different from individual life insurance because the coverage declines each year or declines as the mortgage declines. Some additional differences between mortgage life insurance versus individual life insurance are the following:
1. The bank is the beneficiary. On an individual life insurance policy, the insured can choose their own beneficiary.
2. The coverage is not portable. This means that the insurance is tied to a specific mortgage. With an individual policy, the insured can keep their coverage if they move homes, switch banks, or eventually pay off their mortgage.
3. The plan ends as soon as one spouse passes away. An individual policy can be set up as a joint policy, meaning a joint or multi-life policy, which allows the beneficiary to receive a double benefit in the event that both spouses pass away.
4. The coverage is not convertible. A mortgage life insurance policy is not convertible to a permanent policy, but an individual term life policy is convertible to a permanent plan without a medical. This allows the insured, who may have developed some health issues over the life of the policy, to convert to a permanent level rate plan without any health questions or without any medical tests.
5. There are no cash values. When the coverage ends, there are no premiums returned. However, individual policies can be set up as universal life or whole life policies, which allows the insured to combine their insurance protection with a savings component.
For more details on mortgage life insurance versus individual life insurance, please contact us at 1-866-899-4849 or visit our Mortgage Life Insurance Guide Page.
