Term Life Insurance vs Mortgage Insurance - Which is Best for Me?
Do you know the difference between term life insurance and mortgage insurance? Many people ask me this question and want to know which option is best for them.
Term life insurance is a temporary form of life insurance that will provide you coverage for a particular period of time. The death benefit that would be paid in the event of your passing away and would go to your beneficiary or beneficiaries to be used for any reason they wish. You may want to purchase term life insurance, if you have financially dependent children as a way to protect your income for a set number of years. This way, a surviving spouse can continue to live in the manner accustomed to and perhaps, pay off any debts they may have so that no one else would have that financial responsibility. The monies could also protect a mortgage so that the survivors may continue to live in the family home. Term life insurance is for a fixed amount that would remain the same for the length of coverage.
Mortgage insurance is designed to strictly protect your mortgage. With this type of insurance, should you pass away, the death benefit goes only to the mortgage holder. This form of insurance will have a decreasing face amount. As your mortgage gets smaller, so does the coverage amount.
Mortgage insurance will generally cost less, but again, the death benefit decreases and goes strictly to the mortgage holder. On the other hand, a term life insurance death benefit goes to your beneficiary or beneficiaries and the coverage amount remains fixed. Mortgage insurance could be an alternative to term life insurance if the individual who needs the coverage has health issues and would be unable to obtain traditional term life insurance.
As always, when shopping for insurance keep in mind what you want the insurance for, what is the condition of your health, and how long of a period do you want the coverage for. The good news is you have many.
About the author: Jim Marcinkewicz has been in the life insurance business for over 6 years. He is a big supporter of the American Red Cross and teaches both CPR and First-Aid classes. With two daughters in college, Jim knows the expense it takes to care for your family and enjoys helping others prepare their futures as well. You can reach Jim at 1-800-651-1953 or JMarcinkewicz@Pivot.com.