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When you buy a home, you take a home mortgage loan that you pay off over a period of 15 to 30 years. This home mortgage loan is normally secured against your home-if you fail to make the payment, the mortgage company or the financial institution that has given you the loan can repossess your home. |
Your ability to pay off the loan month after month, over a period of years, enables your family to stay in their home and enjoy a certain living standard.
What if you were to lose your job, fall prey to an incapacitating illness or die suddenly? How would the home mortgage loan be paid in such a case? Would your family have to sell the house to pay off the mortgage? This is why most financial institutions and mortgage brokers advise their clients to opt for mortgage life insurance policies, to ensure that a home mortgage loan is paid off, in case the breadwinners lose their jobs, fall ill or die suddenly.
Mortgage life insurance is decreasing term life insurance purchased on the lives of the signatories to the home mortgage loan in your family. The amount of insurance is equal to the mortgage balance. The mortgage balance declines with every payment you make, and so does the death benefit.
The amount of premium you pay for a mortgage life insurance policy is based on your age and the amount of the home mortgage loan that you have to pay off. The premium could increase sharply every five years, to reflect the increase in your age. You could receive a separate bill for the premium or you may have to pay it along with the mortgage payment. You can get a premium discount for joint coverage, which ensures that the mortgage will be paid off if you, your spouse or other co-owner were to die suddenly.
A mortgage life insurance policy gives your family the breathing space needed to make well-thought out decisions in an emergency-they do not have to act hastily to pay off bills. If you select the right amount of coverage, your family can pay off the mortgage and continue to live in their home until they choose to sell it. When you lose a job, are incapacitated or die suddenly, a mortgage life insurance policy is used to pay off the remainder of your home mortgage loan. This gives your family a clear and undisputed title to their home. | 
