Do You Need Mortgage Life Insurance?

If you have purchased a home with a mortgage, or even refinanced your mortgage, you probably got deluded with offers for a product that is called mortgage life insurance. Most of the time, these offers come in the form of letters that are mailed to your home. Insurance and lead companies generate the addresses from lists of recent mortgages and refinances that are recorded in your local area.

What Is Mortgage Life Insurance?

This is simple. It is term life insurance. The term of the policy may be closely matched to the remaining years you have left to make payments on your home. So if you took out a 20 year mortgage, you may be encouraged to purchase a 20 year term policy.

The offer you got may also mention coverage for disability, critical illness, and unemployment. These other features may be simple options (riders) that are added to a term policy for an additional cost. It may even offer to refund your policy premiums in case you survive the policy. This is done with a return of premium (ROP) rider. It costs a bit more, but refunds all premiums for people who do not make any policy claims.

Note that the unemployment protection is usually just a waiver that will pay premiums. You may get better foreclosure protection for a mortgage from a homeowners policy.

Do You Need Mortgage Insurance?

If you already have plenty of life insurance, you may not need the expense of another policy. If you do not have a policy, or if you policy is through a job you are not sure you will keep, this could be a good time to explore the costs and benefits of a policy.

There is nothing wrong with mortgage life insurance, besides the fact that the ads can be a little deceptive. Insuring your life, and possibly other things, so your family will be able to keep their home is not a bad thing to consider.