Mortgage life insurance is designed to protect lenders if the borrower dies while owing mortgage payments. It may pay off either the lender or the heirs, depending on the terms of the policy.
Some key points before purchasing your Mortgage insurance:
The mortgage insurance coverage amount with a lender declines as your mortgage balance declines, whereas life insurance coverage amount on a separate policy remains the same, even as your mortgage shrinks.
Mortgage insurance through a lender is not portable. Your own life insurance policy through an insurance company is owned by you – you can keep it if you switch banks, pay off your mortgage or move to a new home.
Mortgage insurance through a lender and personal life insurance pay benefits according to the policy terms, coverage amount, ownership, and beneficiary designation.
A mortgage lender’s insurance names the bank as beneficiary if you die. Your personal Life insurance policy allows you to choose your own beneficiary.
Mortgage insurance through a lender is not convertible to a permanent insurance policy because the lender is the policy owner and you are the payer. Some personal life insurance policies may be convertible to permanent coverage, subject to the policy terms.
Premiums depend on the coverage amount, product type, underwriting, and the policy terms. Compare options before choosing mortgage-related coverage.
Compare Personal Life Insurance with Lender Mortgage Insurance
Product suitability depends on the client's circumstances, coverage needs, budget, and underwriting.