Mortgage Life Insurance

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Types Of Mortgage Life Insurance

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Selecting the right mortgage life insurance policy is so very important.

One of the most exciting experiences for many people is the purchase of that first home. You have worked hard and sacrificed much to put together that initial down payment. You want to really enjoy this home if you are single and you want your family to really be happy in it if you are married. Life sometimes can expose you to some cruel experiences.

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What if you should die before the mortgage is paid off? I am certain you would want your loved ones to have the house. If they are minor children it is unlikely that they could make that monthly payment. If you have a spouse that works s/he could pay it. Without your income that may, however, be a strain on that survivors pocket. Mortgage life insurance is the answer.

Upon purchase of the house or at any point thereafter you buy your mortgage life insurance policy. When you die the life insurance company pays off the amount owed. It is as simple as all that.

Decreasing Term Life Insurance
The most favored type of life insurance to buy is the decreasing term life insurance policy. Let us say you buy your house today and let us say after you make your down payment you owe $200,000 to your bank or a mortgage company. You intend, through contract, to repay this money over a 25 year period. The wise thing to do is to buy a 25 year decreasing term policy in the amount of $200,000.
As you make your mortgage payments over the years the face amount of the policy decreases. The face amount is always about the same you owe on your home. If at any point you die your mortgage is paid off by your mortgage protection life insurance policy. Your loved ones get a home free and clear. They have no more payments to make. They own the home. Now isn't that a pleasing idea.
The premiums for your mortgage life policy remain level throughout. They never increase. The beauty of the thing is that the premiums are so inexpensive. This is probably the cheapest type of life insurance you can get.
Level Term Life Insurance
Some people choose to use level term insurance to cover their mortgage. Their reasoning is that their loved ones will get a little more money if they should die later on. Let us, for example, use the same situation mentioned above. Instead of a 25 year decreasing term policy the homeowner would buy a level 25 year term policy. The death benefit never decreases. Therefore, if the person making the mortgage payments dies after 12 years, for example, the full $200,000 is paid. The premium for this type of policy is more than for the decreasing term life insurance policy.