A mortgage is a financial instrument that adds a fixed financial burden to the household. It’s a debt taken that many people willingly take on to have a roof over their head that gains asset value over time. But one worry that is at the back of many homeowners’ minds is, “What happens if I die too soon and the mortgage hasn’t been paid off?” It’s a legitimate concern because leaving a spouse to deal with the debt on a single income can cause them to lose the home they love. It’s possible to get insurance to make sure the mortgage gets paid off if someone passes before the mortgage has been retired. But which type?
Mortgage life insurance works by paying off the mortgage when a spouse passes, but that’s all it does. It doesn’t have a further benefit for the family that remains. Term life insurance makes more sense as it allows the applicant to decide the benefit amount. That amount can go high enough to cover the balance of the mortgage, replace lost income, pay for college, and cover any stray expenses like property taxes. Mortgage life insurance doesn’t offer anything like this for a policy holder. Term life insurance makes much more sense to take care of the worries that come with owning a home and having a family.
Take the quiz to learn more about the differences between mortgage insurance and term life, and which is better for taking care of a mortgage if a spouse passes prematurely.