Buying a home is a huge investment and for most people, it is the most significant purchase they will ever make in their lifetime. Considering the amount of money invested, it is essential to protect your home should the unexpected occur. Mortgage life insurance is designed to provide financial protection to your family and help pay off your mortgage in the event of your untimely death. This article will explore everything you need to know about mortgage life insurance companies and how they can help protect your home.
What is Mortgage Life Insurance?
Mortgage life insurance is a type of life insurance policy that pays off your mortgage balance in the event of your death. The policy is designed to protect your family from the stress of having to make mortgage payments while dealing with the loss of a loved one. Mortgage life insurance companies offer various types of policies with different coverage levels and term durations. The coverage level can range from the outstanding balance of your mortgage to a specified amount that you choose.
The policy can be structured to pay off the entire mortgage balance if the policyholder dies or just a portion of the mortgage balance. Additionally, mortgage life insurance can be purchased as a standalone policy or as part of a group policy offered by the lender.
How Does it Work?
When you purchase a mortgage life insurance policy, you select a beneficiary to receive the death benefit. In the event of your untimely death, your mortgage life insurance company pays the benefit directly to your beneficiary. The beneficiary can use the death benefit to pay off the mortgage loan or make mortgage payments, depending on the policy’s terms and conditions.
You can purchase mortgage life insurance at any time during the life of your mortgage. However, most people purchase it when they buy their home. The premium for this insurance is based on the amount of coverage, term, age, and health of the policyholder. Mortgage life insurance companies typically require a medical examination to determine the policyholder’s health and the premium they will pay.
Why Should You Consider Mortgage Life Insurance?
When considering purchasing mortgage life insurance, it is important to know that it is not mandatory. However, mortgage life insurance can provide peace of mind to you and your family. Here are some reasons why you should consider purchasing a mortgage life insurance policy:
1. Pays Your Mortgage in the Event of Your Death
Mortgage life insurance ensures that your mortgage is paid off in the event of your death. Without this insurance, your family may have to make mortgage payments, pay off the mortgage, or sell the property to pay off the mortgage. This can be a financial burden and cause additional stress during a difficult time.
2. Affordable Premiums
Compared to traditional life insurance policies, mortgage life insurance premiums are generally lower. This is because the policy’s coverage is limited to the outstanding mortgage balance, minus any equity in the home. Additionally, the policy’s duration is typically shorter, usually matching the term of your mortgage.
3. No Need to Qualify for a New Policy
Most people purchase mortgage life insurance when they buy their home since they are already in good health and can qualify for a policy. Unlike traditional life insurance policies, mortgage life insurance does not require you to qualify for a new policy as you age or experience health issues. Once you purchase the policy, the premium and coverage remain the same throughout the policy’s term.
4. Peace of Mind
Mortgage life insurance provides peace of mind to you and your family that your home will be protected in the event of your death. Knowing that your family can keep the home and not have to worry about mortgage payments during a difficult time can provide a sense of security and stability.
Top Mortgage Life Insurance Companies
There are several mortgage life insurance companies to choose from. Here are some of the top companies:
Company |
Rating |
|---|---|
Haven Life |
A+ |
Policygenius |
A+ |
Bestow |
A+ |
Ladder Life |
A |
Quotacy |
A |
Haven Life
Haven Life is a top mortgage life insurance provider known for its competitive rates and excellent customer service. The company offers a hassle-free online application process and requires no medical exam for some policies. Haven Life policies are issued by MassMutual, a highly-rated financial company.
Policygenius
Policygenius is an online-based insurance marketplace that provides access to multiple mortgage life insurance providers. Policygenius offers a simple application process and provides quotes from various providers to help you find the best policy for your needs.
Bestow
Bestow is another online-based insurance provider that offers affordable mortgage life insurance policies with no medical exams. The application process is straightforward, and policies can be purchased online in minutes.
FAQs About Mortgage Life Insurance Companies
1. Does my lender require mortgage life insurance?
No, mortgage life insurance is not mandatory, and your lender cannot require you to purchase it. However, some lenders may offer it as part of their mortgage package.
2. Can I purchase mortgage life insurance if I have an existing medical condition?
Mortgage life insurance companies may require a medical exam to determine your health and the policy’s premium. Depending on your medical condition, the premium may be higher, or you may be denied coverage.
3. Can I cancel my mortgage life insurance policy?
Yes, you can cancel your mortgage life insurance policy at any time. If you cancel within the policy’s free look period, usually 10 to 30 days, you will receive a full refund. After that, you may receive a prorated refund, depending on the policy’s terms and conditions.
4. Can I change the beneficiary on my mortgage life insurance policy?
Yes, you can change the beneficiary on your mortgage life insurance policy at any time. You will need to contact your mortgage life insurance company to update your beneficiary. It is essential to keep your beneficiary updated to ensure that the death benefit goes to the intended recipient.
5. Is mortgage life insurance better than traditional life insurance?
Mortgage life insurance is not necessarily better than traditional life insurance. It depends on your specific needs and circumstances. Mortgage life insurance is designed to pay off your mortgage balance in the event of your death, while traditional life insurance provides broader coverage for your family’s financial needs.
Conclusion
Mortgage life insurance companies offer an invaluable service to homeowners who want to protect their home and family from the unexpected. It is important to research and compare different mortgage life insurance providers to find the best policy for your needs. By purchasing a mortgage life insurance policy, you can have peace of mind knowing that your home is protected, and your family will not have to worry about making mortgage payments during a difficult time.