While life insurance is well-known and common among working adults that have dependents to take care of, mortgage insurance is becoming increasingly popular among prospective homeowners. Both policies allow the insured party to pay off the mortgage but there is a major difference between them.
Mortgage insurance only protects the house or property of a person while life insurance allows a payout that can cover other expenses as well such as debts and children’s education. These funds can also be used to protect the beneficiaries from costs such as property taxes. There are certain factors that wouldn’t affect a basic mortgage life insurance application, but they have the potential to get a term life insurance application denied. These can be certain health-related issues such as a family history of cardiovascular disease or alcoholism. Read up about the various reasons that your term life insurance application can get denied.
Another difference between the two types is that term life insurance is portable while mortgage life insurance is not. There are some mortgage life insurance policies, which can end because of refinancing. This is due to the fact that this type of insurance is tied to the insured party’s mortgage.
It’s arguable that the two types of insurance offer almost the same coverage, but there are chances that one can reduce the cost by applying for term life insurance. The reason for being a cheaper alternative is because term life insurance applications also include a medical exam, which allows healthier applicants to be offered affordable premiums.
Since the mortgage life insurance is tied to the mortgage, in the untimely event that the insured party passes away, the lender is the beneficiary that receives the payout. This is different from term life insurance where the beneficiaries are the next of kin such as spouses or children. If you know think you know the facts on the difference between mortgage and term life insurance then take a quiz to test your knowledge.
If you want to know more about the difference between mortgage and term life insurance, visit the HealthIQ website.