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Mortgage Life Insurance

Updated on April 3, 2009

Mortgage life insurance is usually a clause of the mortgage loan contracts. It implies the repayment of the mortgage, either in full or just in part, in the event of death of the borrower. This type of insurance also covers the value of the loan if the borrower becomes very ill or if he or she is involved in an accident. By getting such insurance, the person who takes the loan makes sure that his or her family, as well as the co-borrowers, is protected from repaying the loan in case something serious happens.

The insurance company is responsible to pay the mortgage, but only up to a certain limit. Considering that the entire mortgage does not exceed that certain limit, the family of the borrower must not be concerned about the necessity to repay the mortgage.

There are certain differences between the mortgage life insurance and the private mortgage insurance. The latter is meant to protect the financial institution that offers the loan in case the borrower is not able to repay the entire amount. This type of insurance is particularly required by the financial institution when the borrower cannot make a down payment of at least 20 percent. The private mortgage insurance premium gets cancelled in the moment when the borrower repays 20 percent of the loan.

Mortgage life insurance quotes may be obtained from all the insurance companies that are available in the area. This is a widely available product whose terms may slightly vary from one insurance company to the other. Quotes and rates may also be found on the websites of these companies. In fact, people are actually recommended to look around to see what options they have before proceeding to getting a mortgage life insurance. A survey will help people, regardless of the type of insurance that they are looking for.


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