What is Mortgage Life Insurance?
Mortgage Life Insurance policies are specific in nature. The value needed in order to pay a debt or loan borrowed for the deceased person’s residence, will be settled by the insurance company. This is also applicable when the policy owner suddenly becomes disabled, or develops an illness which prohibits him or her from completing financial obligations. Like the name suggests, this form of insurance protection exists in order to assist your family when the breadwinner has passed away or is no longer capable of making the necessary payments on mortgage.
It is common practice to offer mortgage insurance coverage when you start filling out the documents for loans. Should you decide to decline the insurance policy, there will be other requirements. More paperwork, like waivers and other forms act as a confirmation that the individual has, indeed, refused mortgage life protection. Aside from ensuring that the homeowner understands the risks involved in not taking this type of policy, the heavy paperwork aims to convince the person to actually take advantage of the offer. In truth, mortgage life insurance is more beneficial to the lender as opposed to the borrower who shoulders its cost.
Insurance can be costly for many citizens, which is why careful weighing of the advantages and disadvantages of the purchase can help one arrive at the best decision.
Many individuals claim that peace of mind is priceless. If you belong to this group, then mortgage insurance is for you. Include the whole clan. Your loved ones can rest assure that they have a home long after you’re gone. A full payment will be made to the bank in charge of the loan should circumstances like terminal illness or death, occur. The screening process for this policy is not as rigorous as the others. Often, no blood work or other medical screening is required for an applicant to avail of the coverage. For someone who is aware of a pre-existing medical condition, this could be valuable and easy compared to availing of other life insurance policies.
Other people, who are not so convinced, view this coverage as unnecessary and expensive. As mentioned earlier, the lender gains more from the policy rather than the borrower. In addition, the policy holder is not able to dictate where the proceeds of the claim should go. Fixed rates apply to premiums of this kind of policy, however, the payout decreases over time. More updated mortgage life insurance policies have fixed payout but only for a couple of years. It is inevitable that the amount will diminish as the mortgage becomes smaller. Despite paying expensive premiums, no checks will be issued to the family because everything will go directly to the bank. The only benefit that they will receive is a home that has been fully paid. Others find it more fitting to use money for more immediate needs over premiums and results that they might not even see.
In the end, an individual’s general health and the value of the house play important roles in determining whether or not one should avail of mortgage life insurance coverage.