How much is mortgage life insurance per month? Well, we’ve been getting this question recently and have decided to provide a well-detailed comprehension of it so that you can make an informed decision if you are aiming to purchase this insurance policy.
Over the past decade, the need to purchase mortgage life insurance has been on the rise because it relieves your family of mortgage burdens and debt in a situation where you are no more.
Purchasing this insurance helps to wipe out your mortgage balance upon your death and enables your spouse, children, and other loved ones to live in the home with peace of mind and without having to worry about mortgage debt.
There is so much good about this insurance, which we will be discussing below, but before that, let’s have an in-depth knowledge of what this insurance is all about.
What is Mortgage Life Insurance?
Mortgage life insurance, also known as mortgage protection insurance, is a type of life insurance that caters to your mortgage in the event of your death.
Unlike normal life insurance policies, which pay out to your beneficiaries when you die, this insurance policy pays out to your lender, and for that reason, mortgage life insurance is a much more limited coverage option compared to the traditional life insurance policy.
It’s designed to protect your loved ones from the burden of mortgage payments in a situation where you are no more.
It is a financial product that can provide peace of mind to homeowners and their families.
Factors that Affect Mortgage Life Insurance Cost
The following are the factors that affect the cost of mortgage life insurance:
Age and Health
Your age and health play a very important role in determining the cost of your mortgage life insurance policy. This is because insurance providers consider young and healthy individuals to be less risky compared to older people.
Generally, younger people pay lower premiums, and vice versa.
The number of coverage you choose for your mortgage life insurance policy will affect the cost. that is to say, the more coverage you need, the higher your monthly premium will be.
Type of Policy
The next item on the list is the type of policy. There are basically two primary types of mortgage life insurance. They are decreasing in terms and levels.
The decreasing-term insurance is more affordable compared to the long-term.
Smokers always pay higher premiums. They are believed to be faced with more frequent health challenges than those who don’t smoke.
So, if you’re a smoker, you can expect to pay higher premiums compared to non-smokers due to the increased health risks associated with smoking.
In some cases, gender can influence the cost of mortgage life insurance. Historically, women have paid lower premiums than men, but this gap has been narrowing in recent years.
Who Needs an Insurance Mortgage?
Well, this type of insurance is not suitable for everyone, so let’s see those who need mortgage life insurance below.
- Married couples with a mortgage
- Families with young children
- People who have a large outstanding mortgage
- Breadwinners in their family.
What Does Mortgage Life Insurance Cover?
The following are covered by mortgage life insurance:
This insurance aims to clear your mortgage balance. You may ask, What is a mortgage balance? Well, this is the amount of principal still owed on the mortgage at any given time.
Your mortgage life insurance policy is designed to cover your outstanding balance if you pass away before the mortgage is fully paid off.
Mortgage life insurance covers the monthly payments on your mortgage. In a scenario in which you happen to pass away, this policy will have to pay out a monthly benefit to your family that’s equal to your mortgage payment.
Just as the name says, this insurance covers the costs that are associated with the cost of a funeral or a memorial service.
As you can see, your family won’t have to worry about the cost of your funeral with this policy.
Mortgage life insurance might include living expense benefits. Now, this is a benefit that’s paid out to your family in addition to the coverage for the mortgage balance and payments.
This helps your family cover basic living costs, such as food, housing, utilities, etc.
This coverage usually takes care of your outstanding debts. So, your family won’t have to be responsible for paying off any debts that you leave behind.
How to Get Mortgage Life Insurance
Below are some of the ways in which you can get mortgage life insurance:
- Through Your Mortgage Lender
- Through an Insurance Broker or Agent
- Through a Financial Institution
- Through an online insurance company.
Overview of How to Get Mortgage Life Insurance
1. Through Your Mortgage Lender
This is often the simplest option and the cheapest as well. You can usually add mortgage life insurance to your mortgage when you take it out.
It is called a “group policy” and is usually cheaper than other types of mortgage life insurance. The challenge with this policy is that you won’t be able to customize it.
2. Through an Insurance Broker or Agent
Unlike the first one, this is a good option that also allows you to customize the coverage. A broker or insurance agent will help you secure this offer. The major issue is that it is expensive.
3. Through a Financial Institution
The third option is getting mortgage life insurance through a financial institution, such as a bank or credit union.
This option can be a good choice if you already have an account or other financial products with the institution and want to keep everything in one place.
But the major challenge is that you may not be able to customize your coverage.
4. Through an Online Insurance Company
The last option, though not the least, is getting mortgage life insurance through an online insurance company. This option is becoming increasingly popular due to the wide adoption of the internet.
Getting mortgage life insurance through online platforms is usually fast and easy to set up, and you can also customize the policy to your needs.
However, it’s important to make sure you’re dealing with a reputable company, as there are a lot of scam artists online.
Pros and Cons of Mortgage Life Insurance
- No medical exam
Let’s assume you are unable to get health insurance due to some reasons. You still won’t have to undergo any medical or health assessments before obtaining this insurance.
- It pays off your mortgage debt
You won’t have to overstress yourself during your lifetime in paying off your debts because you are already assured that this policy will have your debts covered when you die.
- Allows family members to live in a home mortgage-free
Your family can keep the family home without having to deal with mortgage payments when you die.
- The cost
This insurance costs way more than other term life insurance policies.
- Loved ones don’t receive the insurance payout
The funds from your insurance go to the mortgage company to cover your home loan balance and not to your spouse or children.
- Restrictions on how funds can be used
The death benefit covers your mortgage, so it can’t be used to pay bills or final living expenses that might come up after your death.
How Much Is Mortgage Life Insurance Per Month?
This is a very important question; however, there is no exact answer to this question. This is because the cost of mortgage life insurance varies greatly depending on a number of factors.
These factors include your age, health, and many more, which we have discussed above. However, as a general guide, a healthy person in their 30s can expect to pay around $30 to $50 per month for $250,000 of coverage on a 20-year term.
FAQs on Mortgage Life Insurance
Does age affect the cost of mortgage life insurance?
Yes. the older you get, the more you will pay for coverage. This is because as you get older, you are more likely to have health problems, and the risk of death increases. Therefore, insurance companies use this information to calculate the cost of your policy.
Does health affect the cost of mortgage life insurance?
The answer is also yes. Your health can have a big impact on the cost of your policy. If you have any pre-existing medical conditions, you may have to pay a higher premium. Even if you are healthy, the insurance company may still consider things like your family medical history, lifestyle habits, and weight when calculating your premium.
Does location affect the cost of mortgage life insurance?
Well, the cost of insurance can vary depending on where you live. This is because different states have different insurance regulations, and different areas have different risks such as natural disasters or crime rates. So, your location plays a major role in how much you'll pay for your policy.
Does the amount of coverage affect the cost of mortgage life insurance?
The amount of coverage you choose will affect the cost of your policy. This is because the more coverage you have, the higher your premium will be. The insurance company considers it a higher risk by offering you a higher level of protection. However, it's important to remember that you should choose the amount of coverage that best meets your needs, even if it costs a little more.
Does the length of the policy affect the cost of mortgage life insurance?
Yes, this is another factor that can affect the cost of your policy. Generally, the longer the policy term, the higher the premium will be. This is because the insurance company is taking on a greater risk by offering you coverage for a longer period of time.
To conclude, the answer to the question “How much is mortgage life insurance per month?” is that it depends.
The cost of your policy will vary depending on a number of factors, including the ones we just discussed.
Therefore, it’s best to speak to an insurance agent who can help you find the right policy for your needs and budget. Good luck!