Match the timeline
Compare the remaining mortgage term with the length of coverage. Include whether you plan to move, refinance or pay the balance down early.
Protect the place called home
Mortgage protection.
Your home is part of your family’s stability. Life insurance can help create a plan for mortgage payments if an insured family member passes away.
The essentials
What this service means.
Mortgage protection often uses life insurance to address a mortgage obligation. Some policies pay chosen beneficiaries, while other arrangements may pay a lender. Ask who receives the benefit and how it changes over time.
Choose the benefit
A level benefit and a decreasing benefit serve different goals. Understand whether the benefit is fixed or declines during the coverage period.
Consider the household
A mortgage is only one expense. Utilities, maintenance, childcare and everyday bills may also need to be included in your family’s plan.
What to consider.
- Private mortgage insurance (PMI) protects the lender against default; it is different from life insurance for your family.
- Homeowners insurance addresses covered property losses, not the same need as life insurance.
- Disability or job-loss protection is not automatically included. Review any separate coverage or rider.
Let’s break it down.
Does my lender’s PMI protect my family?＋
PMI protects the lender if you default. It does not replace a family life insurance plan.
Will the benefit automatically pay off the house?＋
That depends on the benefit amount and beneficiary arrangement. With a policy payable to your family, beneficiaries generally decide how to use the funds.
What if I refinance or move?＋
Review the policy’s portability and terms. Some individually owned life policies can continue, but you should reassess the amount and duration.
Further reading: CFPB: What is private mortgage insurance? ↗
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