Are you all set to buy your own home? Congratulations!
It is certainly one of the most important phases of your life and exciting too. The thrill of having your dream fulfilled and the nervousness of making some really challenging decisions is a hard combination to deal with. One of the biggest decisions you have to make is whether you should invest in life insurance when buying a home or not.
Mortgage life insurance is a plan that pays off your debt if you die before the mortgage is paid off. It is often known as mortgage protection insurance as well. This insurance policy is usually great for your family as it secures the home and your family doesn’t lose it. However, is it the best option available? Let’s find out.
How does Mortgage Life Insurance Work?
Mortgage life insurance is invested when you buy your home or right after doing so. The insurance plan will be almost as long as your mortgage duration.
So how do you get mortgage life insurance? This coverage plan is usually offered to you by the lender himself. Mortgage lenders usually have insurance companies affiliated with them. If your lender does not offer you a mortgage life insurance and you are interested in getting one, you can connect with any well-reputed insurance company to get the details and invest in it. However, they usually find it best that they get the insurance plan through their mortgage lender as the premium gets rolled in the loan.
For this policy, your beneficiary is your mortgage lender. None of your family members or your partner can be the beneficiary of this insurance policy. What does this mean? This simply means that your mortgage lender will be responsible for paying off the remaining money of your debt if you pass away. No money is passed onto your family or spouse from this policy. It basically helps you keep the home, no matter what. It is yours to keep.
Benefits of Mortgage Life Insurance
Now, given that a mortgage life insurance policy secures your home, for you and your family, it does seem advantageous in the long run. This is the biggest perk of it. It gives you and your family a secure feeling and brings peace of mind to you. If something ever happens to you, your mortgage will be taken care of and your family won’t have to make efforts for it.
However, if you gather knowledge about your normal life insurance policies, you might find out that they also provide you with the same type of peace of mind. They can also bring a similar level of family flexibility.
1. No Medical Exams
Life insurance policies usually require you to pass medical exams. But with mortgage life insurance, you don’t have to worry about it. It does not have any health queries or checkups involved. You can assume it to be an alternative for you, for life insurance, without the need for medical examinations.
With mortgage life insurance, you get the option of adding riders to your policy. These are life insurance benefits and return of premium. However, it is important that you discuss the rider’s availability and benefits with the mortgage lender beforehand.
Disadvantages of Mortgage Life Insurance
It is critical to weigh out the pros and cons of a policy before you decide to invest in it. Here are a few downsides of mortgage life insurance:
If you are healthy and fit, this is an expensive option to opt for. They usually cost a lot more than your standard life insurance policy. Thus, having knowledge about other options might help you a lot.
2. Accurate Quote is Hard to Find:
When you invest in your own house, you will get various options for mortgage and mortgage life insurance. Comparing each one of them and finding the perfect quotation might be a challenge. It gets confusing as well. Therefore, be very patient throughout the process because it becomes easier to make the wrong choice.
Keep in mind that home insurance and mortgage life insurance are two different elements. If you are taking out a mortgage to buy your own home, a mortgage lender will definitely try their best to sell you this policy too. If you can manage your budget along with mortgage life insurance, as it is usually costly, you might find it an attractive catch.
It is best to compare your standard life insurance policies with mortgage life insurance before making a choice. For many, mortgage life insurance is the best bet as there are no medical examinations involved and it is relatively easier to get as well.
In light of your requirements and needs, you make a decision that suits you the best.