What Is Mortgage Life Insurance?
If you have a mortgage and are a home owner, you have most likely heard the pitch for mortgage life insurance. It typically comes in an envelope from your lender and might include a letter from your lender suggesting that you buy a policy. It is important to realize though, that the insurance itself is sold by insurance companies. Even though it is called "mortgage insurance," it is in reality decreasing term life insurance that will pay off your mortgage if you pass away.
How Are Premium Payments Planned?
Mortgage life insurance is a decreasing term policy. The policy starts with a death benefit that is equivalent to your existing mortgage balance. The death benefit reduces at the same pace as your mortgage balance. The premium payments never vary but may cease before the loan payment. Your lender may agree to include the premium payments to your monthly mortgage expense.
Is Mortgage Life Insurance Identical to Private Mortgage Insurance (PMI)?
No-mortgage life insurance is commonly befuddled with Private Mortgage Insurance (PMI), but they have little to do with one another. You purchase mortgage life insurance willingly to shelter your family from having to pay the mortgage.Mortgage lenders require you to buy PMI to shield them (the lenders) from the probability that you will default on the mortgage.
Insurance Tip: Request for insurance agents to estimate their best price for a decreasing term policy in the same amount, period, and interest rate before buying from a sales pitch sent by your mortgage company.
1 comment:
Its really good to know that life insurance policy can help to pay off the mortgage. I will start collecting more information about mortgage insurance from an agent and will try to make out this policy soon. Thanks for sharing the details about this insurance type.
commercial insurance
Post a Comment