best insurance stock - How does mortgage life insurance work : The best way to think of mortgage life insurance is that it is term life insurance with a single purpose: to payoff your mortgage in the event of your death.
A mortgage life insurance policy is tied to your mortgage in almost every way. At the time that you take your mortgage , whether on a purchase or refinance , the death benefit on insurance policy is set up to match the amount of your mortgage loan.
A mortgage life insurance policy is tied to your mortgage in almost every way. At the time that you take your mortgage , whether on a purchase or refinance , the death benefit on insurance policy is set up to match the amount of your mortgage loan.
However , the death benefit will decline as your mortgage is paid down. Once your mortgage is paid off , the life insurance goes away.
In the event of your death , the proceeds of the policy will go right to your lender to payoff the mortgage on your house.
As to the specifics , there are variations depending on which insurance company you use as well as the particulars in your situation. It’s also important to remember that while a lender may recommend that you get mortgage life insurance , you are not required to get it. It is strictly optional coverage.