Protect Your Family with Mortgage Insurance

by MSO
mortgage insurance provides peace of mind

Mortgage insurance provides support for your family in the event that you become disabled or pass away before the mortgage on your home is paid.

Most people who sign the dotted line at the bottom of a mortgage agreement are overwhelmed with emotions. It’s the first step in securing an investment; a first step in starting a family household; a traditional means of moving ahead in adulthood. However, while purchasing a mortgage for their homes is a significant financial investment, it’s also the longest-running investment most people will ever have to make.

During the life of a mortgage, many unforeseeable factors can arise such as illness, injury or even death, that may leave some people facing financial difficulties. These natural events that no one person can anticipate, can often be made worse by financial insecurities, especially if you or your spouse is injured, becomes critically ill or unexpectedly dies.

With mortgage life insurance, a family or the dependents are able to pay off the mortgage of the home in the event of a tragedy. Through mortgage life insurance, families can choose between two main types of coverage which include:

• Decreasing Term Insurance: This form of insurance is designed for those with a repayment mortgage, which means, the balance of the loan decreases over the term of the mortgage – therefore the sum covering the death benefit will be the face amount of the policy when purchased, and after years pass, the death benefit will decline.

While the premiums paid will be low at the onset, they will remain constant throughout the life of the policy and making them cheaper than regular term life insurance.

• Mortgage Life Insurance: The basic concept of how mortgage life insurance works, for example over a 10-year loan, you purchase decreasing term life insurance. In the first year’s coverage, the insurance will be equal to the amount of the loan. As the loan is being paid off, the insurance is being paid at the same rate to allow for an annual equal decrease whereby at the end of the tenth year, the coverage of the loan is down to zero as is the life insurance, which then ceases to be in effect.

However, with mortgage life insurance, there is a downside which is that since it only covers the remainder of the mortgage and is paid directly to the lender, you don’t have a choice of how or where to allocate the death benefit, while with term life insurance, you have the flexibility to pay off other debts first.

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