Insuring anything that is of a great value in life is always a good idea. Based on this idea, apart from the Life insurance policy, there are many additional policies that help people classify their needs and make life more comfortable for their loves ones. Mortgage life insurance is one such policy that enables the complete payment of mortgage of the property bought by the insurance policy holder, in case of unforeseen circumstances. Mortgage insurance is not a mandatory requirement by law like auto insurance, but many people opt for it because it gives the security to the homes of the policy holders when it is most required.
To suit the varying needs of customers, mortgage term life insurance is available in many different policy forms. These policies depend primarily on the type of the housing loan that the policy holder has. If the policy holder has the repayment housing loan, where the loan is paid off in installments which reduces the principal, then the decreasing term insurance is suitable. If the loan repayment amount goes into covering the interest on the housing loan, then the level term insurance is most suitable.
- Decreasing term: In decreasing term insurance, the amount for which the policy holder is insured keeps decreasing over time, along with the premium payments, as and when the loan amount is repaid. If anything were to happen to policy holder, the amount remaining in the mortgage is paid off by the insurance company, according to the policy. However, if the mortgage is completely paid by the end of the insurance term the policy holder will not get any amount paid by the insurance company, and the policy becomes void.
- Level Term: Level term insurance is for people who have unchanging principle amount on their housing loans and the premium amounts of such insurance remain constant. The insurance is for the unchanging amounts of premium. If the mortgage is fulfilled before the policy then the policy holder gets nothing. But if anything were to happen to the policy holder the total amount that has been insured is released to the family. Family of the policy holder may find this to an advantage because some amount may be left after completely paying off the mortgage which can be used for personal expenses.
Mortgage life insurance quote varies depending upon the addendums to these available insurance types. It can be expanded to cover for terminal illness and critical illness, in order to ensure that the mortgage is paid off and the home of the policy holder is secure. Terminal illness policy can be added after the diagnosis of the illness and the policyholder’s life expectancy is twelve months after the diagnosis. Critical illness provides coverage for any illness developed while the mortgage is still being paid, and the remaining amount of mortgage is paid off owning to the inability of the policy holder to pay for it. Many people opt for mortgage life insurance at the time of buying the house.
The mortgage life insurance rates completely depend upon the type of insurance chosen, and the time at which the insurance is bought. For example, if the critical illness mortgage life insurance coverage is added when the policy holder is in poor health condition, then the premium rates are considerably high. Internet is a valuable source in comparing quotes from different insurance companies, and choosing the one that suits. Mortgage insurance policy depends on the age of the insurer and the term chosen for the coverage. Other lifestyle choices like smoking and drinking comes into picture too and the premium rates are decided based on them.