2007-01-23 04:02:06 · 18 answers · asked by Ms. Pinky 2 in Business & Finance ➔ Insurance
That all depends on how much coverage the person has on the life policy. If you have about $200,000 left to pay on your mortgage and you only have $100,000 coverage, then it will only cover half of the mortgage. Most people who have life insurance are under-insured, meaning they don't have enough life insurance. Reason is that they probably have a very expensive life insurance policy or they can't afford more coverage base on the premiums. This only relates to cash value life policies such as Whole Life.
With term insurance, you can buy lots of coverage for a low amount of premium. That means you can probably afford a $500,000 policy and only pay maybe $100/month on it. Let's say you have 25 to 30 years left on the mortgage, then a 30 year term is the right choice to pick. When mortgage is paid off, most people usually don't need life insurance anymore because they are near retirement by that time and they need to save more.
2007-01-23 07:09:54 · answer #1 · answered by Anonymous · 1⤊ 0⤋
Most life insurance policies are a lump sum payment. However, you can get a decreasing term that will pay your payments. Usually, this is pretty expensive when you look at it from a cost per thousands standpoint. If you get this, remember that you will pay the same monthly premium when you owe $200,000 as you will when you only owe $5,000. The payout decreases over time, but the premium does not. Most times, it is better to get standard term insurance to cover the debt. Then your beneficiaries can pay off the house and not have to worry about having a payment at all. The only time I would consider using the decreasing term was if I knew that I would only be in the house less than 5 years. In this instance you could come out better using the decreasing term.
2007-01-23 05:00:59 · answer #2 · answered by Michael R 1 · 0⤊ 0⤋
Life insurance usually is meant to cover your final expenses as well as provide a comfortable means of living for your loved ones. If you bought a policy that is well over your mortgage, than your beneficiary may use the remiaing funds to cover the mortgage payments. It depends on your beneficiary on what they would like to do with the policy funds. It may also be used to provide a college education, if you have young ones.
2007-01-23 05:48:08 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Life insurance won't pay the mortgage itself, You decide, according to your mortgage and any other expenses that you feel should be
covered, like child education, last expenses, some money for your wife to adapt to the loss of income. etc. The m oney is paid to the beneficiary. The best insurance to buy for that purpose, is term insurance, that you take for the lenght of time that you feel is necessary.
Is a type of term, specially designate for mortgage, is known as a decreasing term and i decreases every year the same way that your mortgage decreases. The amount has to be adjusted by the interest rate of the mortgage and the years left to pay. Decreasing term is cheaper.
2007-01-23 05:47:27 · answer #4 · answered by lm050254 5 · 0⤊ 0⤋
Life Insurance is usually a lump sum amount that your inheritor receives once you die. There are different types of insurances that provide different options for personal insurance, but most of the time Life Insurance is supposed to be a lump sum. Usually, you should have enough insurance to cover the cost of paying off your debts (mortgage, etc) and death expenses.
2007-01-23 04:04:20 · answer #5 · answered by Drew P 4 · 0⤊ 0⤋
Just a life insurance policy, won't cover it. Your benficiary will receive a one time lump sum payment. You can get additional insurance that would cover your payments if you died. You'll need to contact the company your mortgage is through. For an extra fee each month, most places offer this.
2007-01-23 04:06:39 · answer #6 · answered by Fool in the Rain 6 · 0⤊ 0⤋
No. Life insurance is for the purpose of providing money in the event of your death. If you owe a mortgage, you still owe a mortgage. If you have mortgage disability insurance...this might pay upon your death. Depends on the type of policy and coverage you have. If you have a 10,000 life insurance, then your beneficiary gets 10,000. etc. Mortgage payments still go on unless you had a policy to pay off the mortgage in the event of your death.
2007-01-23 13:05:15 · answer #7 · answered by reel tur 2 · 0⤊ 0⤋
Yes.
There r many plans in Life Insurance which provide u cover against ur loan.
The Plans are there which cover the Loan Amount According to the Interest Rate.
This insurance is called CREDIT GUARDIAN INSURANCE
I am in Life Insurance Business.
2007-01-23 04:11:57 · answer #8 · answered by Anonymous · 0⤊ 0⤋
as long as you purchase enough insurance to cover it. if you have a policy for $500k, and your mortgage is $300k, you are covered with $200k to spare.
You dont have to have mortgage protection insurance. There are 2 types of this: one that the lender offers & will go to them at death & the other is mortgage protection through an agent that will go to the beneficiary & they can pay it to the lender.
2007-01-23 04:36:08 · answer #9 · answered by ricks 5 · 0⤊ 0⤋
You need to purchase mortgage insurance. Just contact your mortgage company and ask them about it. Our's is included with our mortgage payment every month and is fairly reasonable. If either of us dies the mortgage is automatically paid off.
2007-01-23 04:13:51 · answer #10 · answered by puckbunny 3 · 0⤊ 0⤋