If you need insurance to pay off a mortage if spouse dies, which is the best kin of insurance to buy?

Answer 1

Life insurance is usually cheaper than mortgage life; and stays after the loan is paid

Answer 2

As your spouse gets older, insurance risk is greater and costs go up (ie: more likely todie if 45 than 35, and insurance companies know that.)
But as you pay off more mortgage, you want the pay out to be less, so cost goes down with mortgage insurance.
But the 50,000 to 500,000 doen't only have to go pay off the mortgage. By the time your spouse passes away, there will be more bills for Education and dowries for the kids, other debts, finishing off projects ... which is not your original reason for taking the insurance, but when a big life changing event happens (such as loosing a spouse), financial problems only add to your burden, so insurance is there to help.

Life insurance costs depend on the health of the insured at the time of taking out the policy. If there is a health scare 5 years from now, the cost of new insurance would be at a higher rate, but existing policies keep the same health status.

For my money, term life insurance.

Answer 3

Well the plain and simple answer is term insurance. Term insurance usually comes in denominations of 5 , 10, 15, 20, 25, 30. You can buy universal life and dial it in to how many years you want it to last, but that is a conversation for another day.

Please, please, please do not buy "mortgage insurance" First of all there is no such product as "mortgage insurance" it is just an industry name for Decreasing Term insurance. Which is a dinosaur of a product. Basically it is the same product as Level Term, however you continue to pay the same premium as the Death Benefit decreases. (In level term you pay the same premium for the same amount of insurance for a predetermined length of time (or "term").

The guy who answered this question before me was correct. You should not just look at Life Insurance as something to pay off the mortgage in case your spouse dies prematurely. However, you should look at it as something that will help you (or your spouse) full fill your life goals even if you are not there to provide the funding for them.

In closing, do not worry about what the product is, just figure out how much you need and how long you need it to last and the product that fits your price range is the one for you.

Hope that helped

Answer 4

If you are only looking to use the proceeds from insurance to pay off your mortgage I would suggest using a term policy with a decreasing death benefit.

These policies work just like they sound, as your mortgage continues to be paid down the amount you would have to pay in the event your spouse passes becomes less each year. So for example if you have 20 years left on your mortgage and you owe $250k then you can take out a 20 Year Term Insurance Policy with an initial death benefit of $250k. Each year the death benefit would reduce along with your mortgage balance. This makes the cost of the insurance go down as your need for it becomes less. Ideally, you won't need to use it and as your mortgage becomes paid off your insurance policy expires as has your need for the policy.

I believe this is the most cost effective way to accomplish what you asked.

Answer 5

The least expensive option would be mortgage insurance. This is a policy that decreases in payoff as the mortgage payoff goes down. It will usually be included in your mortgage payment.

Then next option would be to get a term policy for the length of the mortgage. This will be more expensive and you will need to get a policy for each spouse. It will have the same payoff value for the life of the policy though.

Answer 6

You're probably better to go with a term life policy.

Answer 7

Term life is best option