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 vs 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 only pays out a benefit equal to the mortgage, even if both spouses die. Your own life insurance will pay out twice the amount in the event of a simultaneous death.
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 you don’t own the mortgage insurance. Lender is the owner and you’re the payer. Your own Life insurance policy through an insurance company is convertible without a medical to a permanent policy – providing lifetime protection and the ability to generate a tax-sheltered cash value.
99% of time Mortgage Insurance is more expensive than your own personal Life insurance policy. Depending on the amount and type of life insurance you choose to purchase.
Get your life Insurance Instead of Mortgage Insurance