Every year, millions of people either refinance there mortgage, get a home equity line of credit or buy a new home. With such a large purchase comes responsibility. To make sure that the home stays with the family in case of the mortgage payor(s) death, people will carry a mortgage life insurance plan. What exactly is mortgage life?
Simply put, mortgage life insurance is usually a term life that will pay off your mortgage loan in the event of your premature death or that of the co-borrower or both. It usually is offered by a lender or directly by an insurance company.
Mortgage life is sometimes called mortgage protection insurance or loan life insurance.
It is not to be confused with PMI which stands for Private Mortgage Insurance or LMI which stands for Lender Mortgage insurance. PMI and LMI do not protect the borrower, it protects the lender. It is often a requirement when a borrower puts down less than 20% of the amount borrowed. In case you default on the loan, the lender is at least guaranteed that 20% of the loan will be paid back by an insurance company. The lender buys the policy and passes the cost on to you.
Beware as there are many types of mortgage insurance plans. Some plans only pay in case of accidental death and those are usually offered by lenders. Some mortgage life insurance plans decrease in value as your mortgage debt decreases. Some mortgage life insurance plans allow you to transfer the insurance to another lender or loan which is often done as people are always on the look out for better interest rates. Plans that are not portable have the potential of being canceled without you approval. Although, some lenders will require that you sign a waiver to opt out of their mortgage life insurance, know that this waiver may serve only one purpose - and that is to make you reconsider your decision to opt out of the lender's mortgage life insurance plan.
With all mortgage life insurance, you are entitled to full disclosure of benefits and restrictions. If you have your own private mortgage life insurance plan, all details should be with the policy. If you opt for a lender's mortgage life insurance plan, you may need to request a copy of the master policy (as you will only get a certificate).
In some cases, particularly with private plans, additional riders will be available that can greatly enhance the value of your mortgage life plan. Some riders may include terminal illness, disability, long term care and more. Make sure to ask your lender or advisor about these potential additional benefits.
I hope this gave you a better idea of what mortgage insurance is. Selecting the right plan can be tricky, so please ask as many questions as you need to. This could be one of your most important decisions. Be well.
Philippe Deray - About the Author:
Philippe Deray is President and CEO of MCD Financial Services and MCD Life. Our web site address is http://www.mcdlife.com/mkt/mi.html
Our Focus: Life Insurance for people who have or have had health problems.
With many years of experience in the insurance business, we have developed proprietary methods to help individuals get affordable mortgage insurance. We offer term insurance, whole life and universal life insurance. We will make this process as simple as possible and get you an answer as fast as possible.
Company Profile
MCD Life is a successful, dynamic company built on the principal of serving our customers FIRST! Our primary mission is to bring peace of mind to our clients by offering innovative, value-added products and information that place emphasis on short and long term benefits, benefits backed by selected companies with high quality assets and written guarantees.
Simply put, mortgage life insurance is usually a term life that will pay off your mortgage loan in the event of your premature death or that of the co-borrower or both. It usually is offered by a lender or directly by an insurance company.
Mortgage life is sometimes called mortgage protection insurance or loan life insurance.
It is not to be confused with PMI which stands for Private Mortgage Insurance or LMI which stands for Lender Mortgage insurance. PMI and LMI do not protect the borrower, it protects the lender. It is often a requirement when a borrower puts down less than 20% of the amount borrowed. In case you default on the loan, the lender is at least guaranteed that 20% of the loan will be paid back by an insurance company. The lender buys the policy and passes the cost on to you.
Beware as there are many types of mortgage insurance plans. Some plans only pay in case of accidental death and those are usually offered by lenders. Some mortgage life insurance plans decrease in value as your mortgage debt decreases. Some mortgage life insurance plans allow you to transfer the insurance to another lender or loan which is often done as people are always on the look out for better interest rates. Plans that are not portable have the potential of being canceled without you approval. Although, some lenders will require that you sign a waiver to opt out of their mortgage life insurance, know that this waiver may serve only one purpose - and that is to make you reconsider your decision to opt out of the lender's mortgage life insurance plan.
With all mortgage life insurance, you are entitled to full disclosure of benefits and restrictions. If you have your own private mortgage life insurance plan, all details should be with the policy. If you opt for a lender's mortgage life insurance plan, you may need to request a copy of the master policy (as you will only get a certificate).
In some cases, particularly with private plans, additional riders will be available that can greatly enhance the value of your mortgage life plan. Some riders may include terminal illness, disability, long term care and more. Make sure to ask your lender or advisor about these potential additional benefits.
I hope this gave you a better idea of what mortgage insurance is. Selecting the right plan can be tricky, so please ask as many questions as you need to. This could be one of your most important decisions. Be well.
Philippe Deray - About the Author:
Philippe Deray is President and CEO of MCD Financial Services and MCD Life. Our web site address is http://www.mcdlife.com/mkt/mi.html
Our Focus: Life Insurance for people who have or have had health problems.
With many years of experience in the insurance business, we have developed proprietary methods to help individuals get affordable mortgage insurance. We offer term insurance, whole life and universal life insurance. We will make this process as simple as possible and get you an answer as fast as possible.
Company Profile
MCD Life is a successful, dynamic company built on the principal of serving our customers FIRST! Our primary mission is to bring peace of mind to our clients by offering innovative, value-added products and information that place emphasis on short and long term benefits, benefits backed by selected companies with high quality assets and written guarantees.
