Mortgage life insurance is an insurance policy to pay all or part of a mortgage balance if the borrower dies before the mortgage is fully paid off. Mortgage life insurance helps to assure that the borrower’s family will receive a mortgage free home.
Who Purchases Mortgage Life Insurance?
A person who purchases mortgage life insurance owns a home and wants additional protection for their family if anything happens to them. Many people who purchase mortgage insurance do so because of the belief that the family would no longer be able to afford the home upon their death.
How Does Mortgage Life Insurance Work?
Mortgage life insurance is a type of term life insurance. The amount of the policy is usually equal to the mortgage balance, up to the insurance company’s policy maximum. The borrower pays a monthly premium for the insurance coverage. The premium may be billed separately or included as part of the borrower’s mortgage payment. As the mortgage balance declines, due to the monthly mortgage payments, the death benefit declines as well.
Problems with Mortgage Life Insurance
Many mortgage life insurance companies do not examine the insurance application until a claim is filed. This can result in the borrower being ineligible for the mortgage life insurance despite paying all of the premiums because of a mistake in filling out the application, or because the borrower misunderstood of one of the questions.
Do I Need a Lawyer for My Mortgage Life Insurance Issue?
The application process for mortgage life insurance is very complicated. A minor mistake in the application can jeopardize your mortgage life insurance despite paying all of the premiums. An insurance attorney can help you negotiate a mortgage life insurance contract that fits your needs and can ensure that all of the complex paperwork is filled out correctly.