30th September: There are different options to choose from in case of mortgage protection insurance depending upon various factors in each case.
What is mortgage protection insurance—First of all, let us make the term clear. By mortgage protection insurance, we mean to say a kind of decreasing term insurance policy(life insurance) where a fixed premium is required to be paid for the entire duration of the mortgage.
If the concerned individual dies during the policy period, your mortgage is paid by the insurance. In such a case, the lender is the beneficiary of the insurance policy if the borrowing party becomes a defaulter.
Factors governing mortgage insurance cost—One can buy mortgage protection insurance either at the time of purchasing a home or any other time.
A life insurance firm will review your application and fix a price keeping in view various factors like age of the concerned individual, amount left on the individual’s mortgage and smoking status.
Please bear in mind the fact that your monthly premium payment will be high if you have a high outstanding mortgage balance.
However, there will be no change in your premium even though the balance shows a decrease. The reason behind this is simple.
With the passage of time, the likelihood of your death increases the chances of payment on your policy by your concerned life insurance company.
Options for mortgage protection insurance—Level term life insurance is a good option for those who want to provide a choice of using the insurance amount to their beneficiaries. Choosing a regular decreasing term life policy can save costs while paying the balance amount of your mortgage on your death.
There is yet another type of mortgage protection insurance. This type of mortgage protection insurance covers both the spouses and pays out when any of the spouse dies.
This is known as joint mortgage protection insurance.
However, before choosing any particular mortgage protection insurance, its advisable to seek the guidance of any independent advisor to get maximum benefits considering the changing circumstances and the affordability levels.