What is mortgage life insurance?

Mortgage life insurance is an optional product designed to pay off your mortgage if the primary earner passes away. It is often bundled into mortgages, and provides homebuyers some peace of mind. Mortgage life insurance takes away a major concern about purchasing a home and leaving behind a large debt if you die prematurely.

However, mortgage life insurance is rarely the best choice. The reason is that premiums remain level throughout the duration of the mortgage, while the death benefit declines with the mortgage balance. For a lower cost, you could get a term life insurance policy instead with guaranteed level rate and coverage for the entire 15, 20, 25 or 30 years. The death benefit will not decline on a regular term life insurance product.

For example, you might want to protect a $200,000 mortgage. With either mortgage life or term life insurance, your premiums will be based on that $200,000 value, and will remain level throughout the entire term. But if you pass away after most of your mortgage is paid, and only a $50,000 balance remains, mortgage life insurance will only pay a $50,000 death benefit. Term life insurance will pay the full $200,000 death benefit.

Family owned and operated since 1969, American Term is dedicated to getting you the right life insurance at the right price, even if you are considered high risk. If you have been quoted a high price or even told that you are uninsurable, we can help! Call us today at 1-800-380-3533 to learn how our unique dual application process can bring your life insurance premiums down. We look forward to working with you.