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Mortgage Life Insurance Plans

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 Mortgage Life Insurance Plans
Mortgage Life Insurance Plans

Mortgage Life Insurance

Home is always the costliest investment one is likely to make in his lifetime and at times, mortgages cannot be fully paid off even during the lifetime of your succeeding generations! For most, mortgage payments are a part and parcel of their adult lives and they consider themselves fortunate when they have been able to successfully pay off all their dues by retirement. This has made mortgage life insurance a much in-demand alternative for those who do not wish to burden their future generations with hefty mortgage payments.

Most homeowners keen to invest in a mortgage life insurance are already troubled by the incredibly high prices involved in the home-buying process which is plagued with various legal formalities. Moreover, most lenders demand title insurance as a guarantee in the unlikely event that the land may be owned by a person who is not the same as the one from whom the lender is buying the land. Such a situation is highly unlikely because when you buy a home, a title search is invariably conducted during the process.

Private Mortgage Insurance

Lenders usually demand 20% down payment for a mortgage loan which most buyers are unable to pay. Lending institutions therefore wants buyers to obtain private mortgage insurance or PMI till loan balance stays under 80% of the value. The regular homeowner’s insurance along with policies is responsible for increasing mortgage payments. Naturally, all homeowners are keen to avoid having to make any extra payments apart from their respective monthly mortgage bills. The mortgage life insurance policy includes a one-time payment which can keep your family well protected from financial hardships in your absence.

Evaluation

This policy helps to pay any outstanding balance that remains on the mortgage loan in case the policy holder dies before all dues are cleared. Any regular life insurance coverage can guarantee a pre-fixed amount of money for your beneficiaries. But when you buy mortgage life insurance, your coverage is limited and there remains no cash surplus after the balance is paid off or when the policy is redeemed.

The policy is not a guarantee that all your mortgage dues will be cleared. The homeowner and policy holder need to fix the extent and duration of coverage. Monthly payments are unchanged although coverage may become less in course of time.

Sometimes mortgage life insurance policies may help to bail you out when you are terminally ill. Usually terminal illness is defined by companies as one wherein death is certain to happen within a period of 12 months from the time at which the illness had been diagnosed. In cases of joint life insurance policies, the payouts are handed over when the first of the policy holders dies or has been diagnosed with any terminal illness.

All policy holders must make regular payments because when a policy lapses, all the money invested into it has to be surrendered. Factors like age, sex, coverage duration, coverage amount, medical history and equity determine premiums for this policy. Equity has to be guarded at all costs since the home is one’s most precious investment. When buying a home, you are not likely to have sufficient equity and may lose heavily in case of an untimely death. Mortgage life insurance is a wise choice for those with more equity because these people typically stand to lose more in case of unforeseen deaths.

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Mortgage Life Insurance Plans


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