Mortgage Life Insurance Pros and Cons
Mortgage life insurance has both pros and cons, and while this product may be ideal for some homeowners it may be an unnecessary expense for others. Finding a mortgage life insurance quote is easy, because of the many insurance companies out there that offer this coverage, but do you really benefit or are the disadvantages more numerous?
The pros of mortgage life insurance are many. This insurance coverage will pay off your mortgage balance in full if you die while you still owe on your home. These mortgage insurance companies offer insurance no matter what your health is or what pre-existing conditions you may suffer from. Even if you can not get traditional life insurance coverage a policy to cover your mortgage can be managed. Another advantage is that you may find it is easier to get approval for a mortgage loan if you have this type of insurance. Even the best home mortgage lenders may insist on some type of insurance if you have a low down payment. Other benefits include the fact that usually no testing or medical exam is needed.
There are some cons associated with mortgage life insurance, as well as the advantages offered. This type of insurance offers you a decreasing benefit without decreasing the rate that you pay. Unlike mortgage disability insurance or traditional life insurance which pays a set amount, this insurance keeps the same payments but your payout amount declines along with the amount of your mortgage loan. Another drawback is that this insurance payout benefits the lender, not the survivors except that the mortgage is paid in full. This type of policy can also be very expensive when compared to other options for most people.
Mortgage life insurance has numerous pros and cons, and while this insurance is a good option for some it may not be ideal for others. If you qualify for traditional life insurance instead you may pay lower premiums and have a fixed payout amount, but for those who can not do this then a policy to cover your mortgage balance in the event of your death may be a smart financial move.