Community Chat

[151949]

My parents had an insurance policy on their small mortgage. When my Mom died the insurance paid off the mortgage. Does anyone know if they still sell this type of insurance?

[esmeraldagooch]

We kept getting these offers in the mail when we bought our home.  I am sure you can find one easily.

[151949]

Thanks - at our age I think it would be a good idea. We will only have less than 20% of the value of the  house mortgaged, but I still think it could be hard for one of us financially if we lose half our income and have a mortgage to pay.

[cmoose]

You can still buy mortgage life insurance- but may be better off just buying a term policy for the duration of the loan. With mortgage life insurance, if you buy it from the bank you never see the money the bank just pays off the mortgage directly. If you own a term life policy and something happens to the insured person the beneficary gets the money and can use it how ever the need to at the time. There may be better ways to use the money, as mortgage money has low interest rates and perhaps there are other bills that are more of a burden than the mortgage.- Just a thought. 

[CelticCrafter]

Mortgage insurance protects the lender - not the borrower.

Might be better off with a term life policy.

[KathyPet]

MOrtgage Insurance is a horrid investment.  AS the balance on the mortgage goes down so does the value of the policy and yet you are still paying premiums based on what the mortgage balance was when you took out the policy.  buy a term life insurance policy for the mortgage amount.  AS the mortgage balance decreases the policy value remains the same giving the beneficiary the full face value of the policy not some reduced amount. 

[software]

I don't recall the details but any time I've asked about a mortgage insurance, I've been talked out of it.   My life insurance will cover the balance if there is one when I pass.

Not sure if you should have something in your will to specifically order the mortage to be paid off when you pass.   You would think that would be a no-brainer for your executor but you can ask your attorney about it.   I've put the fear of God in  my kids to be sure they pay off my debts, if I have any when I pass.   Hope it works or I'll haunt them!

I have other money saved for their inheritance, but my life insurance is to cover any funeral expenses, debts, etc.

@151949

[151949]

@software From your post I am assuming you are by yourself. In our case there are two of us and should one die the one remaining would only have half the income. Some type of insurance to cover this mortgage would be needed so the remaining spouse doesn't get left being financially strained to pay it, or having to sellor take a big hit out of savings in order to get out from under the payment.

[sommertime]

We call it credit life insurance. In death it pays off the house, or car, depending on what you have covered. There is also insurance for if you are disabled it will make the house/car payments for you until you get back on your feet again.

[151949]

@sommertime Thanks. That's what I was talking about. We don't need to worry about the disability as we are retired.But our SS is almost exactly the same amount monthly so if one of us dies the remaining one would have monthly income drop approx 50%.