We all know that talking about mortgages, life insurance, or anything else related to personal finances is as interesting as dishwater. But life could be a lot harder financially without things like mortgage life insurance.
So, what exactly is mortgage life insurance, and why is it so great?
In short, if you or your partner dies, mortgage life insurance can make the difference between keeping a roof over your head and losing your home, which is a scary thought.
Even though getting life insurance can be sad because it makes us think about our own deaths, it is the right and fair thing to do for your partner and any next of kin to make sure that your finances are in order in case you die.
So why do you need life insurance to cover your mortgage? A mortgage life insurance policy has a set term, and most people choose to have it run the same length of time as their mortgage. If you die before the end of the term, the policy can help pay off the remaining balance on your mortgage. This will be a lump sum of money.
This means that if you die, your dependents won't have to worry about how to pay your mortgage if they can't find the money. They won't have to worry about selling up or maybe downsizing in order to keep a roof over their heads, which are the last things you'd want to put them through.
The good thing about mortgage life insurance is that you only pay for the amount of coverage you need. This means that as the amount you still owe on your mortgage goes down, you only pay for the amount of coverage you need.
There are single life and joint life mortgage life policies. With a joint life policy, the money is only given out when the first claim is made. You can choose how long you want the policy to last, and as we've already said, most people have it run the same length as their mortgage. In most cases, you can pay extra for extra benefits like critical illness cover.
With critical illness benefit, the policy pays out either when the person dies or when they are diagnosed with a critical illness (like certain cancers or a triple artery bypass), depending on which comes first. Check with the insurance company you choose to see what illnesses are covered. This can vary from company to company.
If the policy pays out before the end of the policy term, the policy is no longer in effect. And if the policy is still in effect at the end of its term, it won't be worth anything.
If you want mortgage life insurance, do some shopping around and don't just take the first quote you get. Premiums, policy terms, and other benefits can vary a lot from one insurance company to the next, and you might be surprised at how cheap mortgage life insurance can be without sacrificing quality.
