What is mortgage life insurance?
Mortgage Insurance, also known as mortgage life insurance or creditor insurance, safeguards your mortgage in the event of your passing. It’s typically provided by major banks and lending institutions, ensuring that if a person named on the mortgage were to pass away, the remaining balance of the mortgage is paid to the lending institution.
Acquiring your dream home often marks the most significant investment in a person’s life. However, unforeseen circumstances such as critical illness, accidents, or death can place a financial strain on your family members, who may struggle to keep up with mortgage payments or face the prospect of selling the home. Mortgage Life Insurance offers a solution, providing a flexible and affordable means to safeguard one of your largest financial obligations.
Benefits Of Mortgage Life insurance
Life is unpredictable, and unexpected events can derail your plans. To safeguard your assets and cover liabilities such as mortgages, it’s prudent to secure mortgage insurance alongside your home purchase. In the event of your death, life-threatening illness, or accident, Mortgage Life Insurance offers the following benefits:
- Complete coverage of your outstanding mortgage principal amount.
- Coverage of up to five years of accumulated interest.
- Settlement of any debit balance in your tax account.
Mortgage Insurance
In the event of a diagnosed fatal illness within one year, Taaj Insurance offers an early payout to alleviate financial concerns. This same protection is also extended to your co-borrowers or guarantors of the mortgage, providing additional security.
Coverage for your mortgage can commence from the date of mortgage approval, ensuring protection even before the closing of your new purchase.
If your mortgage exceeds $500,000, you may qualify for partial Mortgage Life Insurance coverage.
Distinguishing between Mortgage Life Insurance and individual life insurance:
1. Mortgage insurance differs significantly from individual life insurance as the coverage decreases each year or decreases in tandem with the mortgage.
2. In mortgage insurance, the bank is the beneficiary, whereas in individual life insurance, the insured can designate their own beneficiary.
3. Coverage is non-transferable, meaning it is tied to a specific mortgage. In contrast, with an individual policy, the insured retains coverage if they relocate, change banks, or pay off their mortgage.
4. The policy concludes upon the passing of one spouse. Conversely, an individual policy can be established as a joint or multi-life policy, allowing the beneficiary to receive double benefits if both spouses pass away.
5. Mortgage life insurance coverage is not convertible to a permanent policy, unlike an individual term life policy, which can be converted to a permanent plan without a medical exam. This flexibility enables the insured, who may have developed health issues, to switch to a permanent plan without undergoing additional health assessments.
When buying your new home, make sure to explore and compare the most competitive life insurance quotes available. Compare the rates of a term life insurance policy with those of a mortgage insurance policy. You’ll likely discover that a term life insurance policy offers lower annual premiums and provides greater coverage and flexibility compared to a mortgage insurance policy. At Taaj Insurance, we guarantee the lowest quotes for both term life insurance and mortgage insurance, ensuring you get the best value for your money.