Mortgage life insurance provides financial protection for homeowners who are at risk of defaulting on their mortgages. A life insurance policy is a type of insurance primarily designed to cover a debt that has been incurred to secure the borrower’s payment of a loan. If the insured died while still under the contract, then the insurance would continue to pay out an appropriate capital sum to pay off the outstanding debt. Life insurance policies generally have a higher premium than other types of insurance, but they are the most financially sound way of securing your family’s future.
Most life insurance companies will provide you with quotes from different life insurance companies online. You can compare quotes from different insurers to determine which one provides the best coverage for your needs. To get the best quote, it is important to understand the ins and outs of how life insurance works so you can use the right type of policy for your situation.
What is a life assurance policy? Essentially, a life assurance policy (LIP) is a contract that provides you with a financial guarantee if you are unable to make your monthly payments on your mortgage or other financial obligation. The money paid by the insurer is called an « advance »premium ». In some instances, you may be required to make additional payments during your mortgage loan’s term. Your policy’s premium is usually based on your age, the value of your home and the length of time the insurance is in effect.
How do life assurance policies work? Life assurance policies are similar to an ordinary insurance policy, except that you will receive an advance on the premium that pays off the debt if you die or become incapacitated. These types of insurance policies are called « life insurance policies » because the initial premium payments that you make will provide you with a return on investment (ROI), which is a return on your premium that is based on your actual lifetime income and the duration of the coverage. When you decide to sell the policy, you can make a lump sum payment or roll the premiums over.
It is important to note that most life assurance policies are non-refundable and have a term that is generally at least five years. This means that if you die before the term is up, you will not receive a refund of any premium.
How does a life assurance policy to protect your family? When you obtain a mortgage loan, lenders require a borrower to provide a complete set of financial documents to prove that they will pay off the mortgage as scheduled, including an acceptable income statement, a copy of a recent pay stub, bank statements, and a list of all property and financial assets held by the borrower. With a life assurance policy, the life insurance company will purchase the loan and then pay off your mortgage should you die while still being owed on the mortgage.
The life insurance company will cover the remainder of your financial obligations on your mortgage by paying out the premiums in an amount equal to the total amount owed. This means that should you die, the life insurance company will still have an amount to pay off your debt. Although the life assurance policy is the only liability that you will have to pay out if you die, it does not necessarily mean that your loved ones will not have to deal with the consequences of a defaulted loan.
The life assurance policy protects you, and your family, from financial obligations that can cost you money when you die or are incapacitated. It will help pay off the costs of college tuition, medical bills, funeral expenses and other expenses associated with caring for your children.
