If you’re buying a home or renewing an existing mortgage, you may be offered group insurance by your lender or broker. You put a lot of money towards your home, so it’s worth taking steps now to protect your investment.
Mortgage life insurance is typically marketed towards new homeowners who may be concerned that an unexpected death or illness could leave their loved ones with a large mortgage.
Personal life insurance can perform a similar function for you, but isn’t tied to just covering your mortgage. It’s designed to provide your beneficiaries with money in the event of your death. Its flexibility allows your beneficiaries to use the money for whatever purpose they wish. It’s an individual insurance product.
Mortgage life insurance is different from mortgage loan insurance. If you buy a house with a 20% down payment, the lending institution requires you to get mortgage loan insurance to protect against the risk of default. Mortgage life insurance, on the other hand, pays down or pays off the mortgage if the borrower dies.