Mortgages can often be a financial burden leaving your loved ones stressed or scrambling if the unexpected were to happen to you. Mortgage life insurance, however, is a unique form of life insurance that specifically covers mortgage payments if you were to pass away. This blog will compare mortgage insurance vs. term life insurance, the cost of mortgage life insurance, if this type of coverage is right for you, and how SelectQuote can help.
What is mortgage life insurance?
Mortgage protection life insurance is life insurance that pays off your outstanding mortgage if you pass away. In many cases, people purchase mortgage life insurance when they buy a home or shortly after and the coverage lasts the entire duration of the mortgage. If you were to pass away during the policy term, the mortgage lender would receive your payout, making it one less thing your loved ones have to worry about.
What is term life insurance?
Term life insurance is one of the most common ways to protect your loved ones financially when you pass away. It’s one of the most affordable types of life insurance, providing coverage for a specific period of time (typically ranging from 10 to 30 years). Flexible payment options and fixed premiums are just a few of the benefits of term life insurance.
Mortgage Life Insurance vs. Term Life Insurance
Mortgage life insurance is technically a type of term life insurance. Both policies have a set period of time, monthly premium payments, and if you were to pass away, have a death benefit that would be paid to the designated beneficiary. When looking closer at comparing mortgage insurance vs. term life insurance, there are a few other differences to consider:
- Mortgage insurance only covers the mortgage, while term life insurance covers all of your expenses up to your coverage limit. This can include utilities, college, final expenses, and more.
- Mortgage life insurance is directly correlated to the balance of your mortgage, meaning as your mortgage decreases, so does your coverage amount. Your premiums, however, will likely stay the same.
- Mortgage insurance is typically more expensive than traditional term life insurance.
How much does mortgage life insurance cost?
Much like any other life insurance policy, mortgage life insurance costs vary from person-to-person. Overall, though, the average cost of mortgage life insurance is often more than the average cost of term life insurance. As there’s no medical exam tied to the coverage, you can be considered more of a risk to take on than traditional coverage. And while the coverage amount decreases alongside the amount left on your mortgage, the payments do not lower.
Do you need life insurance for a mortgage?
For many people, term life insurance is a stronger option for coverage than mortgage life insurance. Term life insurance can often cover more than just your mortgage payments and you have more options when it comes to determining the length of your policy. Additionally, mortgage life insurance is often more expensive than term life insurance.
SelectQuote Can Help Answer Your Mortgage Life Insurance Questions
Whether you’re interested in learning more about mortgage life insurance or are shopping for life insurance coverage for the first time—or anything in between—we can help you compare your options and determine which is right for you. In just minutes we can compare coverage from some of the most trusted life insurance companies on your behalf.