When it comes to life insurance it’s important to understand what you’re purchasing in order to keep your family and loved ones covered. One aspect of life insurance to understand is Term vs. Mortgage.
What is Mortgage Insurance?
As the name implies, mortgage insurance will cover your remaining balance on your mortgage in the event of your passing. One pro of mortgage insurance is that it is typically very simple to obtain. The amount of coverage you receive is directly tied to your mortgage so as you pay down your mortgage over the years the amount you receive decreases. The issue with the decrease in coverage amount is that your premium stays the same. The beneficiary for this insurance is owned by the bank who holds the mortgage.
What about Term Insurance?
Term life insurance provides coverage for a defined period of time, such as 10, 15, 20, 25 or 30 years. As a term insurance policyholder you pay an annual premium amount for the defined period of time and the insurer, or the company you purchased your policy through, will pay your beneficiaries the pre-determined policy amount. There are many advantages including the cost, but it only covers you during the term.
For many cases, mortgage insurance will not be enough for your loved ones. Even though your mortgage would be taken care of there is still the cost of living and funeral costs that will burden your family.
The video below provides additional information about both types of insurance. If you would like to discuss your options call us at 352-371-7977 or email our Financial Insurance Advisor Nick Deas at [email protected].