When you get a mortgage for the first time or when you renew it, your lender may offer you mortgage life insurance. If you’re wondering what that is, you’re not alone!

The purpose of mortgage insurance is that if you or your co-borrower die before your mortgage is paid off, it can help cover the remaining balance.

You may be thinking: “I already have life insurance.” That’s great, but it may not be enough to cover the balance of your mortgage. If your loved ones cannot pay the mortgage, they may be forced to sell the family home.

If your family has to spend all your life insurance on paying off the mortgage, they may not have money left for other needs. So, mortgage life insurance can help provide an extra financial cushion.

At Northwood Mortgage, we love giving mortgage advice. Here, we’re going to let you know more about:

  • The benefits of mortgage life insurance

  • The benefits of regular life insurance

  • Why you may want to have both types of insurance

  • How Northwood Mortgage can give you great mortgage advice about insurance

What are the benefits of mortgage life insurance?

The purpose of mortgage life insurance is exactly what it sounds like: it’s designed to either pay off or pay down the mortgage if the mortgage borrower dies. This means that if something happens to you, your family can afford to stay in their home without worrying about paying for the mortgage.

The process to obtain mortgage life insurance is relatively easy and low-cost:

  • Your lender can sell it to you while you are taking out a mortgage. You can likely roll the costs into your mortgage payment.

  • You are unlikely to have to take a physical exam; it usually only requires answering a few health-related questions.

  • As mortgage life insurance is group insurance, it tends to have lower premiums than regular life insurance.

Another benefit of having mortgage insurance is that it frees up funds from any other benefits or life insurance policies you have, so your family can save or spend that money as needed. Thus, there are many advantages to getting mortgage life insurance.

What are the benefits of personal life insurance?

If you have personal life insurance, it will benefit your beneficiary (or beneficiaries) when you die. Unlike mortgage life insurance, this money does not have to be put towards a specific purpose. The recipients can spend the money however they like.

These are some benefits of personal life insurance compared to mortgage life insurance:

  • It’s not tied to your mortgage in any way, so it will not end when your mortgage is paid off.

  • Its value will not decrease as your mortgage is paid down.

One drawback of life insurance is that if it’s tied to your job and leave your place of employment, you will no longer have that coverage if something happens to you. As well, buying a personal life insurance policy can take time, as it involves discussing your medical history with your insurance company.

In addition, depending on your health, an insurance company may limit how much they are willing to cover you for. Therefore, you may not be able to get enough life insurance to cover your mortgage.

Why You May Want to Have Both Types of Insurance

At Northwood Mortgage, we have been giving mortgage advice since 1990. There are several reasons you should consider having both mortgage life insurance and personal life insurance:

  • Mortgage life insurance is quick and easy to get, and gives you peace of mind that your mortgage will be taken care of. Since it’s associated directly with your mortgage, you know that your house is protected even if you die.

  • Personal life insurance is more time-consuming to get but does not decrease in value as your mortgage is paid off. It gives your family cash that they can spend as they see fit.

  • Selecting to have both mortgage life insurance and personal life insurance offers great benefits, including:

  • Since mortgage life insurance is tied directly to your mortgage lender, your family will not have to try to work with both your life insurance company and your mortgage lender; they will only have to inform your mortgage lender of their circumstances. This will save them stress and paperwork at a very trying time.

  • By having personal life insurance in addition to mortgage life insurance, you ensure that your family will have the cash to spare beyond just paying off the mortgage.

How can we help you?

At Northwood Mortgage, we want our customers to get a mortgage that works for them, and that includes making sure your mortgage is covered even if something happens to you. We are proud to give you great mortgage advice and offer you a variety of programs that will protect your family’s financial security:

Some of the highlights of our programs are:

  • They do not require medical exams

  • We offer a return of all paid premiums (some programs only; please ask us for details)

  • Our premiums do not increase with age

  • Our insurance is portable, and you can move it with you from mortgage to mortgage

You’re Ready to Get Started

Nobody likes to think about the worst-case scenario. However, to protect your loved ones, it’s important to take the proper precautions, including buying mortgage life insurance. We’ve talked about:

  • The benefits of both mortgage life insurance and regular life insurance

  • How it can be beneficial to have both types of insurance

  • How Northwood Mortgage can give you great mortgage advice and information about our programs

We’re Here to Help You

We love giving mortgage advice, including information about insurance! Call us today at 888-492-3690 or contact us online. We are here to answer your questions about our mortgage insurance options.