Living Benefits
Do you know of anyone who has needed a wheel chair, cane or crutches? You should know that you could have access and be entitled to an immediate cash payout if this ever happens to you!
Mortgage protection protects a mortgage holder from incurring any additional debt during their lifetime. These policies purchased along with the original mortgage are usually taken out in conjunction with a term life insurance policy, commonly called a permanent life insurance policy, to ensure that the family's financial concerns are covered at all times. Mortgage protection covers a mortgage holder from loss of income if they die.
A life insurance policy covers the mortgage holder from loss of future benefits if they cannot pay off the balance of the mortgage. Both of these policies must be taken out at the same time. Although there may be a slight difference in the premiums, the amount of death benefit and premiums paid out can mean these two types of policies are very different.
The main difference between the two is the length of coverage provided under both a mortgage life insurance policy and a term life insurance policy. Mortgage protection lasts as long as the mortgage is outstanding, whereas life insurance coverage may be extended for more than 30 years. A mortgage holder's beneficiaries would need to obtain the remainder of the lender's money, should the policyholder die, before being paid the proceeds from the life insurance policy.
Both of these are forms of insurance coverage, but one is specifically for the mortgage holder. Term life insurance provides coverage on a "term" basis, basically covering the life of the person who has taken out the policy. Young couples often use this to ensure that the financial burdens on their family will not be overwhelming. Our Plentii agents want to ensure that your particular situation is safe from all the unexpected parts of life.
Death is inevitable, so mortgage protection helps an individual by offering a source of income in case of death. One can get a mortgage protection or life insurance plan from any private or government agency. This is especially helpful during tough economic times when individuals find it challenging to make minimum payments on their mortgages or life insurance.
The first thing to consider is what type of plan best suits your needs. Many individuals opt for mortgage protection that involves borrowing against the equity of the family home. However, it should also be noted that the interest rate for mortgage protection is variable. This means that it depends on the changes in the financial market. Borrowers should be aware of how much their premiums will be once they reach the age of sixty-five. If you are concerned about such an arrangement's long-term implications, you should discuss the matter with a qualified expert, like us here at Plentii, before proceeding.
When applying for mortgage insurance or life insurance, the mortgage holder must list everyone's names who will be beneficiaries. The mortgage holder must then pay the premium amount. The mortgage holder does not have to list anyone other than themselves, their spouse, or minor child.
Mortgage protection is designed to cover the mortgage holder in the event of their death. This policy is often referred to as mortgage life insurance since it is designed to provide coverage for the mortgage's life. A life insurance policy can be for the mortgage alone or may also include additional protection for the minor children's lives.
If you purchase a mortgage policy from the bank, the insurance company will pay the mortgage lender if you die during the mortgage term. The principal amount of the loan will generally pay the premiums, but this can vary depending on the loan agreement. This type of insurance policy is very similar to life insurance; however, it provides mortgage protection for the mortgage’s life instead of just the principal loan's life.
As a general rule, mortgage protection is less expensive than life insurance. Besides, mortgage protection policies do not require any payout at the end of the policy term, unlike life insurance. However, if you borrow money, the lender's mortgage insurance will force you to pay off your loan before they can make a payment on the loan that you took out. As a result, the cost can become significant, especially if you take out a large mortgage. So, do some comparison shopping to see which is best for your financial situation.
Comments