What is mortgage insurance?
Mortgage Insurance is that insurance in which you can cover your mortgage in the major event of your death. Mortgage life insurance, also known as mortgage insurance or creditor insurance, is offered by most banks and lending institutions. It is a life insurance policy that pays the balance of your mortgage to the lending institution if a person listed on the mortgage passes away.
Purchasing your dream home is often the single largest purchase a person makes in their lifetime. But in times of unpredictable circumstances if you were to become critically ill, suffer an accident or die the financial burden of paying for the mortgage falls on the family members. Would your family be able to keep making the mortgage payments? Would they have to sell your home?
You can protect your family home with Mortgage Life Insurance, a flexible, low-cost way to protect one of your largest outstanding financial obligations.
Benefits of Mortgage Life Insurance
Life is unpredictable. Your dreams may be shattered and your life can take a wrong turn all of a sudden. To protect all your assets and to cover your liabilities such as mortgages it is always a wise decision to be protected by buying mortgage insurance along with the bigger purchase your Home. If you die, get a life-threatening illness, or suffer an accident, your Mortgage Life Insurance can pay the following benefits -
- Your entire outstanding mortgage principal amount
- Up to five years of accrued interest, and
- Any debit balance in your tax account
Differences between a Mortgage life insurance vs. individual life insurance
- Mortgage insurance is very different from individual life insurance because the coverage declines each year or declines as the mortgage declines
- The bank is the beneficiary in mortgage insurance while in an individual life insurance policy, the insured can choose their own beneficiary.
- The coverage is not transferrable. This means that the insurance is tied to a specific mortgage. With an individual policy, the insured can keep their coverage if they move homes, switch banks, or eventually pay off their mortgage.
- The plan ends as soon as one spouse passes away. An individual policy can be set up as a joint policy, meaning a joint or multi-life policy, which allows the beneficiary to receive a double benefit in the event that both spouses pass away.
- The coverage is not convertible. A mortgage life insurance policy is not convertible to a permanent policy, but an individual term life policy is convertible to a permanent plan without a medical. This allows the insured, who may have developed some health issues over the life of the policy, to convert to a permanent level rate plan without any health questions or without any medical tests.
When purchasing your new home, take the time to shop and compare lowest quotes for life insurance. Compare the cost of a term life insurance policy to a mortgage insurance policy. Chances are you'll find a term life insurance policy will have lower yearly premiums and offer more coverage and flexibility than a mortgage insurance policy. We at Green's Toronto Offer and assure lowest quotes on term life insurance and mortgage insurance.