(ARA) – Caring for your family is something you do every day of your life. But there might come a time when you won’t be available.
Mortgage life insurance is a life insurance product designed to help your survivors pay your mortgage after you pass away.
Unlike general life insurance policies that provide a specific benefit amount to a beneficiary of your choice — with the funds being used however the recipient sees fit — mortgage life insurance is specifically designed to pay for your mortgage and only your mortgage. The benefit amount is paid directly to the mortgage lender, and since it is designed to pay the mortgage, it changes over time as the amount owed decreases. The mortgage life insurance policy also ends when the mortgage is paid off, if the purchaser of the policy is still living.
Whether or not you need a mortgage life insurance policy depends a lot on your other expenses and what other life insurance products you may already own. Usually when purchasing life insurance, people factor into the total death benefit amount the cost of a mortgage. If you are worried that too much of the life insurance payout will have to be used by your family to pay off the mortgage – leaving them with less money to cover other expenses – then mortgage life insurance may be right for you.
Have a plan
Most life insurance experts agree that taking a comprehensive look at your overall financial needs – including your mortgage – and determining what your family would require to survive without your income, and then purchasing adequate life insurance accordingly is the better route. Visit LifeInsurance.org and look at the Life Insurance Overview section for details on how to determine how much life insurance you need, and the options available to you.
Terminal illness coverage
One additional advantage of mortgage life insurance is it often will pay off the mortgage not only upon the death of the insured, but also in the case of a diagnosis of terminal illness. For many of these policies, if you are told that you are going to die within the next six months to a year – the mortgage life insurer will most likely pay off your mortgage. For what little solace it may offer you and your family, at least you will not have to worry about mortgage payments.
Courtesy of ARAcontent
