Buying a house is an exciting time in life, and like most people, will require you to take a mortgage loan. However, a mortgage is a huge financial commitment, which is worth protecting for the years ahead.
Mortgage life insurance is an important asset for homeowners, it ensures your family is financially protected if something happens to you. Here’s everything you should know about mortgage life insurance before buying a policy, and whether it’s necessary.
What is mortgage life insurance?
Mortgages are expensive and stressful to deal with. Having to make monthly payments can be extremely frustrating. In addition, many people don’t realize how much their home actually costs until after they’ve purchased it.
That’s why so many families turn to mortgage life insurance when buying a new house. With this coverage, you provide money to your family in the event that you pass away before your mortgage is repaid. This money could then be used to pay off the loan entirely or cover other costs, such as funeral expenses, living costs and more.
There are a number of policies that can be used to cover a mortgage, including:
- Decreasing term life insurance – the payout value decreases over time as you make repayments on your mortgage. Should you die before it’s paid off, your family will have enough to clear the outstanding balance.
- Level term life insurance – term life policies cover you for a set period of time, i.e 20 years. Level term is the standard level of cover. During the policy term, both the cost of your premiums and payout value remain fixed.
- Whole life insurance – unlike term life insurance, whole life cover provides permanent cover. It pays out a fixed lump sum when you eventually die – your family can use this money to pay off the remaining mortgage balance. This type of cover is typically more expensive than term cover, although your premiums are fixed.
Is mortgage life insurance mandatory?
Some lenders require borrowers to carry life insurance policies. However, this isn’t a legal obligation. If you’re not sure whether you need life insurance, speak to your lender first. They may offer additional protection through their own products.
If you do decide to buy life insurance, there are some things to consider. For example, you’ll want to ensure you get the right amount of cover for your needs. You also want to find a company that offers competitive rates.
Where can I buy mortgage life insurance?
You can purchase mortgage life insurance from any major insurer. The best way to compare mortgage life insurance quotes is by using a free comparison tool. If you’re looking to save money on cover, you may want to speak to a discount insurance broker. They can help you find an affordable policy that meets your requirements.
Is buying life insurance worthwhile?
Buying life insurance is one of the most common ways to protect yourself and your loved ones. It’s a good idea to take out a policy, even if you think you won’t ever need it. You never know what might happen in the future.
Ultimately, it depends on what you need the money for. If you don’t have dependents, or you rent from a landlord, then you won’t need mortgage life insurance. But if you’d like to protect your loved ones against financial hardship, then it makes sense to take out a policy.
It’s also worth noting that mortgage life insurance doesn’t just cover your mortgage. It can also be used to cover other finances, such as:
- Funeral costs
- Household bills
- Credit card debt
- Medical expenses
- Providing for your children’s future
Before you apply for cover, it’s important to assess your family’s financial situation. This way, you can work out how much cover they need if you were to pass away.
How much does cover cost?
The price of mortgage life insurance varies on a number of factors, including:
- Age
- Health
- Current mortgage balance
- The type/length of policy
- Occupation
In addition, different companies charge various amounts for the same product. So, it’s always worth shopping around to see which provider offers the best deal. Now that you know how it works, start searching for an affordable mortgage life insurance quote today, and give your family peace of mind.
