subject: Exploring The Many Benefits Of Mortgage Life Insurance [print this page] Everyone has heard the story of a family forced out of their home when the primary provider in their family passed on. Unable to pay the mortgage, the family had no choice but to sell or let the bank foreclose on their house and find somewhere else to stay. In response to stories just like this, companies began offering mortgage life insurance, designed to combat the problem that families were facing. Learning about this different type of policy can help keep your family safe and secure in their home even without you to support them.
Understanding Mortgage Life Insurance
The concept behind this type of policy is simple. It functions like other policies, but it is intended to be used for paying off a mortgage instead of living expenses, school payments, and other household costs. It is available in varying amounts just like any other type of plan, and also has a number of choices that will determine how long it lasts and what type of payout it provides.
In the event of a covered incident, provided that the mortgage life insurance payments were made regularly and the policy is in good standing, the family will be able to claim the benefit and immediately put it toward the mortgage payment.
Like any variety of policy, mortgage life insurance constitutes an agreement between policyholder and provider. The policyholder pays a certain amount at certain intervals, and the company will pay out a certain amount to any named beneficiaries should the policyholder become deceased. After the beneficiaries receive the amount, they are able to use it to cover debts and keep their home.
Term Life Insurance And More
Like any other kind of specialized policy, mortgage life insurance also has several different incarnations within the modern market. The most common form is through term life insurance. In addition, universal options exist, as well as return of premium choices. Term life insurance is preferred because it allows policyholders to be insured for a larger amount for lower monthly payments. Return of premium can also be a good choice. A return of premium life insurance policy will refund all premiums if the policy is never needed. The only drawback is that it is much more expensive that regular term life insurance.
Universal plans can sometimes be a viable option, but they require too much attention for most policyholders. A universal plan requires constant management by the policyholder, who ensures its continued viability. Although some like the level of control that a universal policy offers, most would rather have a seasoned professional take care of their policy than manage it themselves. With term life insurance, the cost stays low, but the payout is large enough to cover most mortgages. It is also the best option for families seeking a simple solution which requires little more than a monthly payment. The lack of complexity and easy accessibility make term policies a very valuable asset to any family's financial plan. Of course, only a careful look at each individual family's situation can reveal their perfect policy.
Who Benefits Most?
This type of policy isn't for every family. Only those who are actively paying for their home require this kind of policy; for others, the equivalent funds would be better spent on another form of protection. Protection is most vital during the early stages of the payments, when a large portion of the debt remains to be paid off. In this situation, financial assistants strongly recommend having some way to ensure that the home is taken care of in the event of a tragedy. Some have even argued that, to new homeowners, mortgage life insurance is as vital as homeowner's insurance.
Leaving an estate with no outstanding debts is a very powerful incentive for seniors to choose this type of policy. If a senior faces a debt on their house payments, that debt will transfer to any heirs along with the property. Then they will be forced to either sell the property to erase the debt or carry on the mortgage in their own name. Both situations can be avoided if the proper precautions are taken, and the estate can be paid in full with no outstanding debt at the time it transfers to heirs.
by: Chris Harmen
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