What is mortgage life insurance?

Mortgage life insurance is decreasing term life insurance that pays the lender if the insured dies before the loan is paid in full. Although the death benefit decreases with the mortgage balance, the price is fixed, making this a more expensive option for most compared to term life insurance.

How does mortgage life insurance work?

When the insured dies, mortgage life insurance pays the remaining mortgage balance directly to the lender. The house is now paid off, and the insured’s family can remain in the home as long as they continue to pay the property taxes and other expenses.

How much does a mortgage life insurance policy cost?

The cost of mortgage life insurance can vary, depending on your age, loan term, mortgage balance and location. Getting quotes from several mortgage life insurance companies can help you find the best rate for mortgage protection insurance.

Should I purchase mortgage life insurance?

If you don’t want to take a medical exam, don’t have other financial obligations and do want to guarantee your mortgage is paid after you die, you should consider purchasing mortgage life insurance. However, buying regular term life insurance may be cheaper, and you might be able to get it without a medical exam.

Can I cancel my mortgage life insurance?

Yes, you can typically cancel your mortgage life insurance policy. Most policies allow cancellation within a specific period after purchase, and some may even provide a refund of premiums. Always review the terms and consult with your provider for specific cancellation procedures.

How long does a mortgage life insurance policy last?

A mortgage life insurance policy usually lasts for the term of the mortgage it's tied to. If you have a 30-year mortgage, the policy will generally last for those 30 years, decreasing in value as the mortgage balance decreases.

Mortgage Life Insurance: What It Is and How It Works

Name: Mortgage Life Insurance: What It Is and How It Works
Item: Mortgage Life Insurance: What It Is and How It Works
Author: Mandy Sleight

Mortgage life insurance pays the lender the outstanding balance of the loan if the borrower dies. Mortgage protection life insurance may be a good fit for someone who takes out a multiyear loan to finance their home purchase.

ByMandy Sleight

Updated: March 15, 2024

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sources

Consumer Financial Protection Bureau. "What is Private Mortgage Insurance?." Accessed August 16, 2023.
U.S. Congress. "Public Law105–216—July 29, 1998." Accessed August 16, 2023.