Understanding mortgage life insurance

What is mortgage life insurance? Is it worth buying? Read on and find out.

10:07 23 May 2013

Mortgage life insurance is a type of insurance made to protect a repayment mortgage. If the policy holder dies within a set number of years, the policy would pay out a capital sum to cover the outstanding mortgage.

This insurance is also usually referred to as Mortgage Decreasing Term Life Assurance. It is decreasing because you normally pay for your mortgage thus the potential payout decreases overtime.

Is it worth buying?

There are certain things that you need to consider before taking out mortgage life insurance. First, it is important that you have dependents. If you live alone and no one will live in your house once you die, getting this insurance is surely just a waste of money.

Also, you need to make sure that you can pay your premiums together with your mortgage without having financial crisis. If you’re struggling to make both ends meet, getting the insurance might not be a good idea at least for now.

If you have the money, then, by all means, get mortgage life insurance. This will give you peace of mind knowing that should you pass away, your dependents will not have to pay for the mortgage.