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Choose the Right Insurance Options to Protect Your House

April 09, 2012 | Comments: 0 | Views: 93

Buying a house comes with a large amount of financial responsibility and is one of the bigger steps that the average person takes. If you have a family, leaving them with a large mortgage debt when you die is less than ideal. To combat this issue, many people purchase life insurance so that their loved ones will have enough money to pay off their outstanding debts when they pass away. While you could always purchase a regular insurance policy, another option to consider is mortgage life insurance. This is a specific type of life insurance policy that is tied directly to your mortgage balance.

Mortgage Life Insurance

Mortgage life insurance is a type of policy that pays off your mortgage if you die while it is still in place. These types of policies are typically offered by the mortgage lender or by an insurance company that is associated with the mortgage lender. They are not required by the lender, but they are promoted as a way to protect your family from the outstanding mortgage if you die.

Declining Death Benefit

This type of insurance is unique as it provides you with a declining death benefit. The death benefit of the policy is equal to the mortgage balance that is outstanding on your home. Over the years, as you make your mortgage payments, the mortgage balance declines. The mortgage policy doesn't offer you a flat death benefit like a regular life insurance. Since it is tied directly to your mortgage balance, the death benefit declines as you pay down your mortgage. This means that at the beginning of the mortgage, the protection that it offers is a much better deal than what it offers towards the end of your mortgage.

Narrow Benefit

While mortgage insurance can pay off your mortgage when you die, it does not provide your family with any other benefits. If you pass away and you are the primary income earner for your family, they will need to replace your income for many reasons. If all that your insurance does is pay off the mortgage, you could leave your family high and dry in other areas. Because of this, a regular life insurance policy may be more beneficial for the average person.


While mortgage protection insurance is not the best option for every single person, it definitely can benefit some people. For example, if you have a pre-existing health condition that would keep you from qualifying for a traditional life insurance policy, mortgage life insurance may be an option to consider. Most mortgage protection insurance policies do not require a medical exam and are given automatically when you sign up for coverage. As long as you keep paying your premiums, this would at least be a way to take care of your biggest financial obligation for your family if you died.


Before signing up for life insurance, make sure that you do a little bit of research and find out exactly what it covers. Some policies may not cover death as a result of a pre-existing condition that you did not inform the company about. Others may not care how you died and will pay out regardless. If you have questionable health, make sure that you read the fine print so that your family is not caught off guard when you pass away.

In some cases, you may simply be able to add a few extra dollars to your mortgage payment to get this kind of protection. Then you'll just make one payment each month to cover the premiums and your mortgage.

To learn more from Martin about mortgage protection insurance, please visit his website to receive whole life insurance quotes.

Source: EzineArticles
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