Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Mortgage Life Insurance

With all the foreclosures that have taken place in the United States over the last few years, a lot of people are asking, should I buy mortgage life insurance?

Generally speaking, if you have no other life insurance or your current life insurance policy is not enough to cover your mortgage then you should considering buying mortgage life insurance.

However, if your current life insurance policy will cover your mortgage plus leave enough money behind to take care of your family, then mortgage life insurance is not necessary.

To make sure that you have the very best insurance rate possible for either a regular life insurance policy or a mortgage life insurance policy just enter your zip code into the free quote finder now!

What is mortgage life insurance?

Mortgage life insurance also called mortgage protection insurance and it is a policy that covers what you still owe on your mortgage if you die before it is paid off. With the real estate industry in such fluctuation and many Americans losing their homes, mortgage life insurance may seem like a good idea. However, it is important to look at your overall life insurance coverage to see if you really need this coverage. Many lenders will try and convince you to purchase it when you buy your home.

This is not the best time to make a decision as many people are nervous about payments when purchasing a home. It is best to make the decision when you have time to review all your life insurance options.

Mortgage life insurance is intended to pay off your mortgage so a traditional mortgage life insurance plan decreases as the amount you owe on your home decreases. Even though this is the case, your monthly premium amounts will stay the same. For example, if you purchase a policy for $75 per month and you owe $100,000 on your home, in 10 years you will still be paying $75 per month for your policy, but you may only owe $75,000 on your home.

The main thing you have to consider before deciding if mortgage life insurance is right for you, is other life insurance plans that you may have. If you have no life insurance, mortgage life insurance is a good idea.

If you have another life insurance plan, look over the pay out amount and see if it will cover your entire mortgage, your other debt, and leave a reasonable amount to help your family. If not, you should find out how much it will cost to increase your current amount to meet those needs. In many cases, this may be cheaper than purchasing mortgage life insurance.

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What options are available besides the traditional mortgage life insurance plan?

In recent years, many different types of mortgage insurance plans have been developed in order to stay competitive in a growing insurance industry market. An increasingly popular type of mortgage life insurance is a return of premium policy. This type of policy will return your premium costs when you pay off your mortgage and no longer need the coverage.

This is slightly more costly, but worth it. If you pay off your mortgage, you will have lost nothing. However, if you don’t pay off your mortgage before your death, you will have lost everything you put into the policy through premiums.

Another type of mortgage life insurance is a level premium policy. This works similar to term life insurance. You purchase your policy for a predetermined length of time. Typical time frames are 20, 25, or 30 years. This type of policy guarantees the policy amount.

So if you owe $100,000 when you take out the policy, the amount stays at $100,000 no matter how much you owe when the policy is cashed in. The premium amount also stays the same over the entire period. It cannot be increased. This is more costly than a traditional plan or a return premium plan, but it pays more in the end. The only thing to consider is, if you pay off your mortgage, you have lost everything you have paid into it.

Deciding on life insurance including mortgage life insurance is a big decision. There are many things to take into consideration including your age, your job risk, your health, your mortgage, your debt, and how your death would impact your family financially. Once all this is considered, you can decide if mortgage life insurance fits into an overall life insurance plan to protect your assets and your family.

How do I compare mortgage life insurance quotes?

One way to find the right life insurance company to work with is to compare rates and quotes through an online comparison tool. A tool like this lets you provide all your pertinent information one time and receive several rates and quotes from top companies. To get started comparing free online mortgage life insurance rate quotes just enter your zip code in now!