Mortgage Life Insurance.You have a choice of several policies that would provide a death benefit that could be applied to pay off your mortgage, however, the
decreasing term life
insurance policy is the most popular one. It seems tailor made for this purpose. The death benefit decreases with your mortgage balance and the premiums are affordable. This is considered the best mortgage life insurance option but there are two other types of insurance that can be applied to your mortgage. We will look at these then we will examine the disability part of your mortgage life and disability insurance plan.
Other types of policies used are
level term life
policies which you would buy according to how long the mortgage period is. If you have 20 years to pay on your mortgage you buy a 20 year term policy. If you have 15 years to pay you buy a 15 year term policy. The amounts paid to your beneficiaries will be substantially more than the amount owed to the bank or mortgage company as the years go by. This death benefit doesn't decrease.
Sometimes
whole life insurance
or variable life insurance
is used as mortgage life insurance if the purchaser intends to redeem the mortgage early. At some point the cash value of these policies...usually somewhere between 10 years and 15 years...are equal to the amount owed on your mortgage. You use the cash value to pay off the mortgage. Let us now look at the other part of mortgage life and disability insurance...the disability part.
