Mortgage life insurance pays the mortgage balance on the insureds home in the event of the insureds death. While it’s a good idea to have life insurance protection, enough to pay off the mortgage balance of the family home, it’s important to understand this type of policy to get the best value for your insurance dollar.
Decreasing Term Life Insurance
The most common option in mortgage life insurance is decreasing term life insurance. This policy will pay the balance of the mortgage in the event of the insureds death. The premiums are inexpensive and are level for the period of the mortgage. However, the are rarely much less expensive than level term life insurance for the same period of time.
Level Term Life Insurance
The decreasing term policy pays the balance off the mortgage at the time of the insureds death. You can use a level term policy to accomplish the same task. However, there will be more left over in the later years.
As time goes on, the mortgage balance is decreasing. However, with a level term life insurance policy, the protection is not decreasing. It remains the same. Therefore, you will have money from the death benefit left over. This is important, because there are often bills left behind that need to be paid – and the cost of a funeral.
Permanent (Whole)Â Life Insurance
Whole life insurance is considerably more expensive. While there are uses for this type of policy, it is rarely used strictly for mortgage protection.
For more information on these and other types of life insurance policies, go to http://www.4lifeinsurance.com.