The Importance of Mortgage Life Insurance

Let's face it - mention things mortgage life insurance - in fact anything personal finance related - and we all know that it is as dull as dishwater. However, without things like mortgage life cover - life could be a lot harder financially.

So, what is mortgage life insurance and what is so great about it?

In a nutshell, in the event of you or your partner dying, mortgage life insurance can mean that the difference between keeping a roof over your head or ending up having your home repossessed - a frightening thought.

And while many of us find organising something like life insurance a sombre business as it makes us face our mortality, it is the fair and right thing to do for your partner and any next of kin to make sure that your finances are in order in the event of your death.

So why do you need mortgage life insurance cover? A mortgage life insurance policy runs for a fixed policy term - most people take it put to run concurrent with their mortgage. Should you die before the end of the term period, the policy can help pay off outstanding balance of the mortgage on your home. This will be in the form of a cash sum.

This means that your dependants will not have the financial worry of trying to find the mortgage repayments in the event of your death. Neither will they have to worry about selling up and maybe downsizing in order to keep a roof over their heads - the last things that you would want to put them through.

The good thing about mortgage life insurance is that you only pay for the cover that you need - so as the amount outstanding on your mortgage decreases, you are only paying out for the level of cover you require.

Mortgage life policies are available on a single or joint life basis. If you have a joint life policy, the amount is paid out on the first claim only. You can decide how long you want the policy to run for - and as we mentioned before, most people have it to run concurrent with their mortgage - and in most cases you can have additional benefits such as critical illness cover for an additional premium.

With critical Illness benefit the policy pays out either on death or on the diagnosis of a specified critical illness (such as certain cancers, triple artery bypass) - whichever occurs first. Check with your chosen insurance provider as to what illnesses are covered, as they can vary from insurer to insurer.

If the policy is paid out before the end of the policy term, it ceases. And if the policy is in force at the end of the term, it will have no cash in value.

If you are looking for mortgage life insurance, then do shop around and do not automatically accept the first quotation you get. Premiums as well as terms of the policy and other benefits can vary wildly from provider to provider and you could be surprised just how cheap mortgage life insurance can be, without any compromise on cover.

Jason Hulott is Business Development Director of Protection Insurance. Protection Insurance is an internet based insurance business dedicated to getting consumers the very best insurance rates and the best products. Visit our Life insurance [http://www.protection-insurance.com/life-insurance.shtml] section and get a quote for mortgage life insurance

Why Everyone Needs to Get a Personal Mortgage Life Insurance Quote

A big part of the American dream for most people is owning a home of their own, and the pursuit of realizing this dream is an expensive one. Once we have chosen our mortgage we find that, the monthly payments end up taking a big slice of our budget. In the event that either you or your spouse dies unexpectedly, the sudden loss of income can very well overwhelm the family and leave your surviving loved ones in a difficult situation, without the means to pay the bills--much less make mortgage payments. To protect your family and loved ones from such a financial hardship, you should consider getting a mortgage life insurance quote.

Mortgage life insurance has a decreasing death benefit that matches your mortgage balance at the beginning of each year. Since the death benefit decreases along with your mortgage balance, the cost of mortgage life insurance is much cheaper in comparison to a level term life insurance policy.

Often when you apply for a mortgage loan, the bank, along with the loan officer will sell you mortgage insurance. This is not actually mortgage insurance, instead it is a life insurance policy designed to protect the bank. They have you pay the policy premium, but the bank is the named beneficiary of the policy. Neither you nor your loved ones reap the benefit if the worst should happen. You end up paying for an expensive policy, owned by the bank in order to protect the bank.

Another catch in such a policy is that although the amount of the cover decreases overtime, the premium remains the same. In reality, the bank should decrease the premium over the coverage period but they do not. Therefore, you are stuck paying for the banks high-priced insurance, while the benefit decreases over the life of the loan. In addition, if you ever decide to refinance or pay off your loan the policy that you have been paying into will no longer be valid, since this type of policy is attached to the specific loan.

Take control of your financial life and get a mortgage life insurance quote that will benefit you and your family instead of the bank.

Mortgage Insurance: What You Should Know

Mortgage insurance stands as a guaranty that reduces or if not, eliminates the loss to the lender in an event that the borrower defaults on the mortgage. As a result, the lender and the mortgage insurer also share the risks of lending a property or an amount of money to the borrower.

There are times when people often confused the term mortgage life insurance with mortgage insurance. Mortgage life insurance is different from the latter because it covers the event of the death of the borrower, or the homeowner's insurance. It also serves as a guaranty that the homeowner is protected from loss due to any uncontrollable events such as fire, flood, or other natural disaster.

From a buyer's perspective, this type of insurance gives a lot of benefits to the buyer. One of the benefits from this insurance policy is that it can help increase the buying power of the homeowner. It can also allow buyers to own their property sooner. It is also very convenient for first time home buyers to use mortgage insurance in order for them to afford their first home.

It will also be easier for them to get a better of a more expensive home later if they wish because they will only be required to put lesser amount for the down payment. Another benefit of this insurance policy is that it can give homeowners gain tax advantages. It is because they will be entitled for reduced interest to claim. The cash that they would have used can be used if the buyer is interested to invest in other properties, or would need an amount for moving costs and other necessary expenses.

Mortgage insurance offers a lot of help for borrowers. Often times, lenders would ask the borrower to give at least 20% of the home's price as a down payment. But if the borrower has mortgage insurance, the lender can allow them to give at least 5% to 10% down payment and that is already a great value especially for buyers who don't have enough savings. The insurance will guaranty your lender that you are really committed to meet your obligation as the borrower or the buyer.

This insurance is also meant to protect the lender and the bank on the event that you decide to default your loan. For instances where you decide to default your loan and you want to claim for benefits, then you will be required to file a claim but the payment however will still go to the lender.

Basically, it will be the borrower who will pay for the mortgage insurance. Though there are a lot of premiums to choose from, you must still be aware of the fact that a monthly amount may be included as the payment for the property to be given to the lender.

Even with a lot of benefits, this insurance policy also has some disadvantages. One of it is the risk of losing your home once you failed to file a claim the moment you realize that you cannot keep up with the payments. It is also very important that you maintain good communication with your lender and inform them right away if you can't make the payment. You are also at risk of ending up with damaged credit the moment your insurance company failed to make the payments on time.

Mortgage Life Insurance With Return of Premium

What is Mortgage Life Insurance? Mortgage Insurance or Mortgage Life is simply a term life policy that has been designed for homeowners. It is usually marketed to new homeowners, or those who have refinanced recently. By recently, it usually means within the last year or so, though some of these products can be purchase by those with older mortgages.

It is usually designed to have a term of years that closely matches the length of the mortgage, in increments of 10, 15, 20, or 30 years. The face value of the insurance policy will usually start at the amount of the loan, though most companies will allow a range of face values. For instance, if a spouse has income, a family may not need to the entire amount of the face value to protect itself. On the other hand, if the family has high expenses, they may desire a higher face value than just the amount of the mortgage.

No Medical Exam Life

Mortgage Life is often sold with a promise that the applicant will not need a medical exam. This sounds good, but health questions must still be answered on a detailed life insurance application. So it won't give health insurance to those with serious health conditions. However, for people with minor health issues, it may speed up the underwriting process. In fact, underwriting is often based on credit, and the fact that the applicant has just qualified for a new mortgage, eases that requirement, so some health requirements may be relaxed.

In any case, for busy people, this really speeds up the life insurance application process! It takes time for medical exam information to get returned to a life insurance policy, and for that information to get processed by a life insurance underwriter.

Return Of Premium or ROP

The Return of Premium Feature is called a rider. It will cost more than the base policy, but it provides an attractive benefit! If the insured person survives the policy, they will get the whole value of the premiums paid back. For a policy term that lasts decades, those monthly premiums can really add up! This is a great way to buy insurance, plus get back a nice check just in time for retirement!

Selecting the Best Mortgage Life Insurance Plan?

Every year, millions of people either refinance their mortgage, get a home equity line of credit or buy a new home. With such a large purchase comes responsibility. To make sure that the home stays with the family in case of the mortgage payor(s) death, people will carry a mortgage life insurance plan. Which plan is best depends upon a few factors.

Your Health

Your health can have a primary impact on the type of mortgage life insurance you select. If you are in great or fairly good health, we recommend that you get your own plan as opposed to a lender's plan. This way, if your health gets worse, then no one but you can cancel the insurance and if your health gets better, you can possibly ask for a re-rate (lower rates). Now, in a situation where you know you will not be approved for a personal mortgage life, then the lender's plan may be your only option. These plans, although priced higher and cancellable, offer a more simplified underwriting process and most people qualify.

Your Age

If you are 45 or under, then a lifetime mortgage universal life plan may be best. Since most people ages 45 or under tend to move a lot, you need to be able to cover your future loans easily and without having to apply all over again or stacking several term life policies. I would select a universal life insurance plan as opposed to whole life. Mortgage universal life is much more flexible and will allow you to adjust coverage to meet your changing needs. If you find that universal life for your mortgage is not affordable, then mortgage term life is a good start. Make sure that the term policy is easily convertible to a good universal life plan (see below for more on conversion). If you are over 45, then the plan of choice should be term life insurance. In most cases, you should still be bale to secure a term plan that is as long as 15, 20 or 30 years. Since the majority of mortgages are that long, that should work. Still make sure that the plan is convertible.

Lender (or mortgagor) plan or your own, which is best?

We partly covered that option above but much more needs to be considered when trying to decide which mortgage life insurance is best. Consider the following advantages of personal mortgage life insurance:

Full control - in other words, only you can make changes to the policy and only you can cancel the policy
Convertibility - The conversion option allows you to switch to universal life (if available) without having to prove insurability. So, if your health goes bad, you are at least guaranteed a certain amount of permanent coverage for life. This will also allow you to cover multiple future mortgages with one plan.
No decreasing insurance - Most personal mortgage life insurance plans offer level coverage. In other words, as your mortgage balance decreases, your insurance still stays level. It seems that decreasing term plan would be good enough but again, your needs will change and you do not want to loose coverage as you get older. Besides level mortgage life insurance plans tend to quote cheaper that decreasing mortgage life insurance.
Portable - Most people do not realize that if the lender sells the loan (which happens often), more often than not, your lender's mortgage life insurance gets canceled. Also, what happens if you want to go to another lender? If you have your own plan, then you can move it to the new loan. If you have a lender's mortgage life insurance plan, then you need to re-qualify and now, since you are older, your cost per $1,000 of insurance is higher.
Face amount gets paid to you - If you have your own plan, then you can designate who gets the money. That will give that person a lot of control over the mortgage pay off and may help avoid unwanted estate taxes. Also, if when you got your loan, interest rates were very low, then investing the mortgage life insurance proceeds may be a better idea. You can always use the earnings you get from investing the insurance proceeds to cover the mortgage payments.
Riders - Lender's mortgage life insurance plans do not offer the same important riders that a personal mortgage life insurance plan will have. For example, a typical personal mortgage life insurance plan may include a terminal illness rider, a waiver of premium, a disability rider, a long term care rider... These riders can come in very handy if you suffer an illness.


Please note that most lenders may automatically include mortgage life insurance into their plan. You actually need to sign a waiver to opt out of the mortgage lender's plan. Why this is allowed is beyond understanding as many people may be paying for a plan they don't want or even need as they may have already secured a personal mortgage life insurance plan. Ask the lender about waiving the coverage, they are not likely to mention it.

Pros and Cons of Mortgage Life Insurance

Mortgage life insurance is a type of insurance wherein the policy holder is able to clear mortgage liabilities in the event of the untimely death of the insured. In such a case, death benefits are equivalent to the outstanding balance on the loan. Quite clearly, this security gives tremendous peace of mind that no matter what, despite the worst case scenario, your family will always have a home to live in. Apart from that, many insurance policies offer optional provisions which include coverage for critical illness. With this option, the insurance company will pay out the outstanding loan in case you qualify conditions for terminal illness.

However, it is vital to examine the pros and cons of mortgage insurance before you make up your mind about purchasing a mortgage insurance policy. One of the major advantages of mortgage life insurance is that it is easy to obtain. In these days of uncertainty and insecurity, it may make sense to opt for a mortgage insurance policy to make sure your loved ones have a home to stay in, even if, anything were to happen to you.

Here are some advantages and disadvantages of a mortgage life policy to help you make an informed decision:

Advantages of Mortgage life insurance

Guarantees clearing your mortgage payment: The death benefit of mortgage life insurance pays off the outstanding balance on your mortgage, and thereby guarantees a home for your family in case of your death. What is also important to note is that, unlike a regular life insurance policy, death benefits from a mortgage insurance policy is not paid to your loved ones but goes directly to the mortgage company towards the payment of your outstanding mortgage. This is useful to ensure that death benefits are used primarily for the purpose of clearing off the mortgage.

Health qualifications for a Mortgage Insurance are considerably lower than qualifying for a regular life insurance policy: The health standard to meet to buy mortgage insurance is much lower than a regular term insurance policy. If you are in bad health then a regular life insurance policy may require you to pay higher premiums. If you suffer from severe health impairments, you may not even qualify for regular life insurance. In such cases, mortgage lifeinsurance is a very viable option for you. It gives you peace of mind by allowing you to get coverage for what is probably your biggest liability-your home.
Financial help during terminal illness: Mortgage life insurance policies may provide protection coverage in case of terminal illness, provided, your mortgage insurance includes terminal illness benefits and you opt for it. This indeed comes as great savior for the policy holder who contracts a terminal illness and can no longer work or earn money to pay the monthly mortgage. In such cases, the mortgage life insurance company will provide accelerated death benefits to pay off the mortgage.

Disadvantages of Mortgage Life insurance:


No payout until the stipulated time period is passed: Regardless of the situation there is no payout within the first six months of the policy. So in case any calamity strikes the insured before the stipulated time, the insured will not receive anything.
Mortgage life insurance coverage decreases with time: In case of your death, the amount of cover will depend on the term of insurance, which decreases more or less in line with the amount outstanding on your mortgage. As a result, you end up paying more for less coverage over the years. That essentially means by the end of the plan, there will be no benefits if you outlive the policy.
Excludes any Pre-existing medical condition: Any pre-existing medical conditions (terminal or otherwise) before the investment are excluded in the policy. Therefore, such conditions cannot be claimed if the situation arises.

Fixed monthly premiums Although insurance cover reduces with time the monthly premiums still remain fixed throughout the life of the policy.
Mortgage insurance may never be considered as popular as universal, whole or term life policies. However, there are some situations where you may want to consider purchasing a mortgage life insurance policy. By purchasing mortgage life insurance, you ensure your home remains a safe haven for your family and they can enjoy many more happier years to come in safety and comfort, simply because you were able to safeguard it for them, through a mortgage insurance policy.