The most common ways to pay off the mortgage if you die is to purchase mortgage insurance or term life insurance.
Term life insurance
With a term life insurance policy your death benefit can be used by your beneficiaries to pay off your mortgage, other debts, your burial expenses, or anything they wish do with it. Your beneficiary, who is usually a dependent, is the person you choose for the money to go to in the event of your death. The most common type of term life insurance used is level term insurance where the premium (how much you pay) stays the same and the amount of protection (death benefit) remains level.
Mortgage life insurance
You can also protect your family from mortgage debt by purchasing mortgage life insurance at your bank or other financial institution. Unlike level term insurance, the death benefit on mortgage life insurance generally decreases over time since your mortgage is also decreasing over time. The premium stays the same. Another difference is that the beneficiary on this type of policy is the holder of your mortgage not your dependents.
Most informed buyers today choose term life insurance over mortgage insurance because it is more cost-effective and has more benefits.
Mortgage insurance is designed for one thing and one thing only - to protect your mortgage. Since your mortgage is decreasing the mortgage life insurance decreases as well. Term life insurance is much cheaper than mortgage insurance and your death benefit stays the same. If you buy a mortgage policy you would have to buy an additional term life insurance anyway to protect your loved ones from other debts you may have, or maybe you would want to cover your childrens education through college if you were to die.
Watch out! Many mortgage insurance plans don't kick in until 6 months has passed. If you were to die within that period the policy would pay out nothing. Term life insurance covers you from day one through the benefit period. Why risk exposure? Also, read your mortgage insurance policy very carefully. Chances are that your mortgage policy will not cover you if you die from any existing medical ailment you may have had when you first bought the policy. That's right, your mortgage policy may not pay out if you die from a pre-existing medical condition.
There may come a time during your home ownership that it may be cost-effective for you to refinance. If you refinance and you owned mortgage insurance your policy will cease and you will have to get another policy.
Informed buyers choose term life insurance:
With a few clicks on your computer you can get a term life insurance quote and start the application process. Click this link for a quote http://www.mytermquote.com. Save money buy purchasing a term life insurance at the best rates available and of course by enough coverage to include all your debts, including your mortgage. Your coverage (death benefit) will stay the same during your term and your premium will too.
With your term life insurance you will be in control of who gets the money when you die. Just let us know who you want to be listed as your beneficiaries and they will be covered. At MyTermQuote we will make sure you understand the policy you are purchasing and guarantee that you will receive the best rates for your insurance plan.
For more information on this topic or to receive a term life insurance quote visit us at http://www.mytermquote.com .