A home is one of the biggest financial commitments you can make. Mortgage protection life insurance helps you keep it in the family, even after you’re gone.
Life insurance offers financial protection to your family by providing a cash payout if you were to pass away. In many cases, that money would go directly to your family to help them cover day-to-day expenses, pay leftover debts, or manage end-of-life costs.
Mortgage protection insurance (MPI) is similar to life insurance, with one major difference: Your mortgage company or lender receives the payout instead of your family. The lender then uses that payout to cover the balance of the mortgage on your home.
Mortgage death insurance can help you realize your dream of owning a home and protect your family from debt if the worst happens. Some lenders require this type of insurance so they have a fallback if you die while you’re still paying off your mortgage.
Also called mortgage death insurance, this type of insurance works in a similar way to decreasing term life insurance. The coverage amount and length typically match the terms of your mortgage, with term lengths ranging up to 30 years.
As you make mortgage payments, your death benefit gradually decreases over time. For example, if you start with a $150,000 mortgage with a 20-year term, your mortgage protection insurance payout might decrease by 5% a year until it is gone at the end of the term. If you die during that time, any payout would go directly to the bank to cover the rest of your mortgage.
In some cases, the term length may be limited by your age. When you’re shopping for a life insurance quote, be sure to ask a professional about your options.
Increasing term could be a good fit if you want your coverage to keep up with expected increases in your income or expenses. With inflation always a concern for long-term coverage, increasing term also protects your financial investment for the future. Increasing term may be more expensive than other types of term life insurance, though, so it may not be worth it if you don’t expect your needs to grow over time. A life insurance agent can walk you through your options and help you find the right fit.
The difference lies in the death benefit, or the cash payout your beneficiary receives when you die. Unlike increasing term, where the payout grows over time, level term policies have death benefits and premiums that stay the same throughout the entire policy. One additional option is decreasing term life insurance, where the payout decreases over the life of the policy. Decreasing term rates are typically lower than other types of term insurance and can be a good way to help your family cover a mortgage or other debt that decreases over time.
If you still want to protect your death benefit from inflation, you may want to consider a level term insurance policy with an inflation rider. Adding this rider can help ensure the death benefit keeps up with rising costs over time. Talk with a life insurance agent about selecting the right coverage amount and rider options to protect your family.
If you still want to protect your death benefit from inflation, you may want to consider a level term insurance policy with an inflation rider. Adding this rider can help ensure the death benefit keeps up with rising costs over time. Talk with a life insurance agent about selecting the right coverage amount and rider options to protect your family.
We’re committed to helping individuals, couples, and families protect themselves and their loved ones financially. With eFinancial, you’ll have access to high-quality, affordable life insurance options from more than 20 leading insurance providers. Our team of licensed agents will guide you through the process so you can get covered as quickly as possible.
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