Mortgage Life Insurance: What is the Mortgage Life Insurance

If you are searching on the internet for the best mortgage life insurance or you want to know about mortgage protection plans or mortgage protection life insurance, then you have come to the right place. In order to get all this knowledge read the full post.

Mortgage Life Insurance: Protecting the Bank

For most families, a mortgage represents the largest debt of their lifetime.

Although mortgage life insurance may look good at first glance, it has

shortcomings. The big banks market mortgage life insurance like it’s a must-

have. Mortgage life insurance is similar to term life insurance. If you were to

suddenly die, suffer a terminal illness, or be involved in a serious accident, your

mortgage would be paid off (usually up to a maximum amount, say $500,000).

The banks make it easy to sign up—and make you sign a waiver so you can’t

hold the bank responsible for a bad turn of events. Once you sign up, the

premium is conveniently paid as part of your regular mortgage payments.

So far, so good, right? But here’s where

mortgage life insurance starts to take a turn for

the worse. The banks boast that you can sign up

for it without the hassle of a medical exam.

Although that may save time up front, it can

prove costly. Here’s what the bank isn’t telling

you: you might not be covered. The bank can

deny your claim if it learns you had a pre-existing

health condition you weren’t aware of or forgot to

disclose when you signed up. This is called post-claims underwriting. Only when you or your family makes a claim do you learn

you’re not actually covered.

Another shortcoming of mortgage life insurance is its declining

coverage. Even though your premium doesn’t go up on renewal, you’re paying

for less coverage as time goes on. The more you pay down your mortgage, the

less coverage you’re getting. For example, if you have a $500,000 mortgage,

you’re initially covered for $500,000 by mortgage life insurance, but if in 10

years you only have $200,000 left on your mortgage, you’re covered for only

$200,000 (if you had a term policy for $500,000, your coverage wouldn’t decline

during its term).

Mortgage Life Insurance vs. Term Life Insurance

Instead of mortgage life insurance, a far better choice for families with dependents is term life insurance.

The premiums of term life and mortgage life insurance are comparable, but term life insurance is a lot

more flexible. With term life insurance, you can pay off your mortgage, cover your funeral and help pay for

your children’s college. With mortgage life insurance, you can only pay off your mortgage. What your bank

isn’t telling you is that with mortgage life insurance, you’re paying for an insurance policy with your bank

—instead of your loved ones—as the beneficiary.


Mortgage life insurance policy/mortgage title insurance/ Home Loan Protection Plan (HLPP) is a policy that covers the borrower against the non-payment of EMI in case of the death of the borrower. There are some policies that have riders of accidental death, disability, critical illness, job loss (max 3 EMIs), etc.
term life insurance
term life insurance. Mortgage protection insurance (MPI) guarantees mortgage debt payment in case of the borrower’s death. Term life insurance can be used to pay for anything, including a mortgage, and is typically the better choice.

Mortgage Insurance Overview:

Basically, mortgage Insurance guarantees repayment of a mortgage loan in the unfortunate event of the policy holder’s death or disability. Usually, 12 months is the tenure of payment of such mortgage insurance (although in some cases it may be higher).

Mortgage insurance lowers the risk to the lender of making a loan to you, so you can qualify for a loan that you might not otherwise be able to get. Typically, borrowers making a down payment of less than 20 percent of the purchase price of the home will need to pay for mortgage insurance.
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