What Policy Do I Need to Pay Off My Mortgage?

One of your most significant investments is your home. In both good and bad times, your home is a constant that you and your family depend on for safety and comfort. For many people with mortgages, payments are not true difficulties, especially considering most payments are less than rent would be for a comparable property. But what happens when one of the primary earners passes away before the house is paid off? Unfortunately, no matter what happens, your mortgage payments will still be due each month, and they must be paid regularly before the sheriff’s note is posted and foreclosure becomes imminent.

One solution to this problem is mortgage protection insurance. This insurance is a seemingly beneficial offer by the mortgage lender that will pay the outstanding balance of your mortgage should you die before it is completely paid off; however, it does have some serious pitfalls that need due consideration. Alternately, at TopLine Life Insurance, our brokers have another solution for the conscientious homeowner who wants to protect his or her family in case the worst should happen: traditional term life insurance.

Read on to learn more about both mortgage protection and term life insurance.

The Competitors

Mortgage Protection Insurance

Mortgage protection insurance, or MPI, is a surprisingly useful tool if you are in poor health and your only concern is paying off your mortgage. Otherwise, there are better plans available. People who have serious health issues usually find it difficult to get approved for most life insurance policies because the medical exams after application will disqualify most of these candidates, leaving them with limited choices. Guaranteed issue, simplified issue, and MPI are usually the only options because they do not require a medical exam for approval. Unfortunately, these plans require higher premiums for lower benefits, and the only one with a benefit big enough to pay off a mortgage is MPI.

Term Life Insurance

Term life insurance is the most popular type of life insurance, especially for younger, healthier customers looking to secure a competitive premium and payout, should they pass away. Term life insurance requires a full underwriting period, including health questions and a medical exam for approval, so better rates are given to applicants who pose less of a risk. This form of insurance requires regular monthly premium payments within a specified term before expiring as well as a renewal. Unlike MPI, term life insurance pays out the death benefit to beneficiaries chosen by the policy owner rather than directly to the mortgage lender.

Which Policy is Right For Me?

Both policies can be invaluable resources for many families, but they both have some limitations and drawbacks that make it unappealing for others. Take a look at the overview below for a brief comparison of MPI and term life policies:

As you can see, the more versatile and advantageous option is term life insurance. If you choose term life, but are still concerned about your mortgage, we at TopLine can work with you to find the best plan that can cover your mortgage; in fact, we will match the amount of insurance to the amount of your mortgage! With this plan, you can set your own beneficiaries and determine the amount of your death benefit that will go to them and to your mortgage.

Term life insurance is not for everyone, but it can be a huge asset depending on your circumstances and priorities. At TopLine, we offer a huge selection of life insurance policies, so call us today. You can speak to a professional broker about any of our plans to find the right policy for you!