Considering Mortgage Life Insurance for Your Peace of Mind?
Are you worried about the balance of your mortgage in the event of a primary earner's death? Mortgage life insurance can provide you with the assurance you need.
Many individuals opt for mortgage life insurance from their bank during mortgage renewals, believing it to be the easiest choice. However, it may not necessarily be the most cost-effective or comprehensive option available to you.
Mortgage life insurance is categorized as "decreasing term insurance" in the insurance industry.
When considering this product, two essential aspects should be taken into account: the amount of insurance payout and the premiums or insurance costs.
Comparing mortgage life insurance to level term insurance - Amount
Both level premium term insurance and mortgage life insurance offer pure insurance coverage, providing a death benefit to beneficiaries upon the insured person's passing.
These policies have no cash values and generally offer more affordable premiums compared to other types of insurance. In fact, mortgage life insurance is a subset of term life insurance.
The death benefit in mortgage life insurance is linked to your mortgage balance. As you pay down your mortgage, the death benefit decreases in line with the remaining mortgage balance.
On the other hand, term life insurance policies maintain a level face amount throughout their duration as long as the policy is active. The insurance amount is not tied to your mortgage balance, allowing the remaining balance to be paid tax-free to your dependents upon your passing.
Comparing mortgage life insurance to level term insurance - Cost
Mortgage life insurance premiums remain constant throughout the policy's term, even though the insurance amount decreases over time.
For instance, if you start paying $300 per year to cover a $200,000 mortgage and after twenty years, you have a $50,000 mortgage, you'll still pay the same $300 premium for the reduced coverage.
On the other hand, level term life insurance offers various durations or "terms" from 10 years to 40 years for you to choose from!
Level term always cheaper than mortgage decreasing term
Opting for a 30-year level term life policy means that both premiums and insurance coverage remain constant for the entire 30-year period. So, after twenty years, you would still pay the same $300 premium (similar to mortgage life insurance), but your insurance coverage would remain at $200,000.
Moreover, when dealing with an insurance broker, they can explore options from multiple companies.
As the term life insurance market is highly competitive, brokers can often find a term life insurance policy with a level death benefit that is more affordable than the equivalent mortgage life insurance.
Mortgage Life Insurance Cost
Directly below are the best $200,000 - 10, 15, 20, 25, 30, 35 and 40 year guaranteed level monthly rates available to men in good health from ages 40 to 65:
$200,000 Rates For Men
Age | 10 Year | 15 Year | 20 Year | 25 Year | 30 Year | 35 Year | 40 Year |
|---|---|---|---|---|---|---|---|
40 | $11 | $12 | $13 | $24 | $25 | $37 | $47 |
45 | $15 | $18 | $23 | $35 | $36 | $51 | $76 |
50 | $20 | $26 | $32 | $56 | $57 | $91 | $155 |
55 | $31 | $38 | $50 | $88 | $99 | $186 | $209 |
60 | $48 | $62 | $85 | $163 | $236 | $266 | $286 |
65 | $80 | $108 | $159 | $296 | $336 | $364 | $381 |
All of the rates above and the coverage amount are guaranteed to remain level for the time frame shown.
For example, if you are age 50 and you purchase the 25 year rate above at $56 per month, this rate and the $200,000 of coverage are both guaranteed to remain level until you turn age 75.
Directly below are the best $200,000 guaranteed level monthly rates available to women in good health also from ages 40 to 65:
$200,000 Rates For Women
Age | 10 Year | 15 Year | 20 Year | 25 Year | 30 Year | 35 Year | 40 Year |
|---|---|---|---|---|---|---|---|
40 | $9 | $10 | $11 | $19 | $21 | $29 | $38 |
45 | $13 | $15 | $18 | $28 | $30 | $39 | $60 |
50 | $17 | $20 | $26 | $41 | $43 | $70 | $133 |
55 | $24 | $28 | $38 | $64 | $75 | $163 | $190 |
60 | $32 | $39 | $61 | $121 | $200 | $247 | $252 |
65 | $53 | $70 | $108 | $248 | $309 | $326 | $326 |
If you're looking for mortgage life insurance for seniors over age 65, it is available but at a higher cost than the age 65 rates above.
Just a request a quote regardless of your age using orange quote button on this page and we'll send you personalized quotes.
Benefits of Level Term Life Insurance:
By now, it's evident that term life insurance can be a superior choice over mortgage life insurance.
You can potentially secure the same insurance coverage at a lower price, and the coverage remains level as your mortgage decreases.
Here are some additional advantages of term life insurance:
- Portability: You own the insurance policy, allowing you to maintain coverage irrespective of your mortgage provider. If you switch mortgage companies, your life insurance policy remains unaffected.
- Convertibility: Many term life insurance plans permit conversion to a permanent life insurance policy. If you find yourself uninsurable after 15 years, a convertible term life policy lets you easily upgrade to a permanent life insurance policy (though at a higher premium).
- Living Benefits: The best term policies now also include chronic and critical illness living benefits, so these can pay out not just if you die, but can also payout if you suffer a chronic illness and need long term care/home health care or a critical illness like a heart attack, stroke or cancer.
- Choice of Beneficiaries: Unlike mortgage life insurance, which typically pays the death benefit to the mortgage holder (usually the bank), term life insurance allows you to determine the beneficiaries. For instance, you could have the bank receive the benefit up to the mortgage amount, with the remaining funds going to your spouse or dependents.
Bottom Line on mortgage life insurance
In summary, it's wise to explore different options for mortgage life insurance to ensure you obtain a more favorable death benefit at a lower cost. Shopping around can make a significant difference in securing the best coverage.
If you already have mortgage life insurance or are considering purchasing it, we recommend getting accurate quote by clicking button above and completing the questionnaire...
Then we'll search our database of rates from 100's of quality insurance companies to find absolute best rate and best value for you!
Feel free to reach out to us by phone or text at 800-380-3533 or email us for further discussion or to begin the process of getting absolute best mortgage protection life insurance.
We're here to help you make the best choice for your mortgage life insurance needs.