If you are buying a new home, the broker or lender will offer you group insurance. Indeed, you are going to make a large investment of money, so it is also very important to protect your investment. The mortgage insurance is for new subscribers who want to protect their families from a mortgage that is far too large in the event of death or a terminal illness.
Here, life insurance is the main player, since it is not only used to cover the mortgage loan, it also allows your family to benefit from a sum of money after death.
In fact, you have to differentiate between mortgage loan insurance and mortgage “life” insurance. For example, if you buy a house and your initial deposit exceeds 20%, it is mortgage loan insurance (default risk). While mortgage life insurance aims to pay off the mortgage loan.
What is mortgage life insurance?
Mortgage life insurance is the insurance offered to an applicant by their lending organization. It allows you to repay all or part of your loan in the event of death.
The product will serve as a refund for your mortgage, which will allow your family to stay in the family home, although they will be deprived of the income which will be used to pay the loan.
It is always advisable to use the same insurer for your life insurance and the mortgage because it will be easier for you to manage them. It’s also easy to fill the mortgage application, or in other words, the process is very simple and that’s one of its biggest advantages. Additionally, you have to choose group insurance which will lower your premiums to a certain extent.
What is life insurance
Life insurance is different. Indeed, it provides for the payment of a sum of money the insurance policy is in force. Thus, your family will be able to benefit from the product for:
- Pay for education;
- Repay credit card credits;
- Cover living expenses, etc.
It is therefore possible to purchase life insurance for a fixed term which is different from that of the mortgage loan.
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