Do you need life insurance for mortgage?


Life insurance for mortgage is widely advertised and many lenders will recommend it. Do you need one? If your health is bad, you don't qualify for other types of life insurance, while with mortgage life insurance no medical examination is required.

Actually, mortgage life insurance comes in different flavors - they provide temporary or permanent coverage of your mortgage payments and perhaps additional funds to relieve other financial difficulties the family may experience in case the main income provider for the family dies. Respectively, the greater coverage, the costlier it is to buy life insurance for mortgage.

The National Association of Insurance Commissioners (NAIC) and federal regulators have argued that mortgage life insurance does not bring worthy benefits to homeowners. They cite comparisons with regular life insurance - in the case the insured person dies, policy amount is paid to the family. In the case with life insurance for mortgage nothing is paid to the family when the mortgage term is over and no insurance event has taken place.

In general, if your life insurance is enough to cover you mortgage payments, you may not need to get separate mortgage life insurance.

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