Why Do You Need Life Insurance on a Mortgage? [Here’s The Details]

do-you-need-life-insurance-mortgage
do-you-need-life-insurance-mortgage

Do You Need Life Insurance On Your Mortgage?

There are many reasons to own life insurance, but no better motivation than to protect your family’s home.

Mortgage protection life insurance will give your family much-needed protection when you die by paying off your mortgage.

There are mortgage protection options available for everyone, whether you’re in excellent health or need of high-risk life insurance.

Why do you need life insurance on a mortgage? You need life insurance on your mortgage so that your family can afford to stay in your home if you die before paying back the mortgage loan to the lender.

Life insurance rates are lower than ever before, so there is no good reason not to carry life insurance if you have a mortgage.

Many people are just not fully up to speed about how mortgage protection life insurance works or how life insurance works in general.

This is part of the reason we created an easy guide explaining life insurance that you can see here.

Otherwise, trust us, life insurance rates are very affordable in 2019.

Don’t just take our word for it; see for yourself!

Use our free rate comparison tool to compare the rates of the best mortgage life insurance companies on the market today.



Our article will cover everything you need to know if you are on the fence about getting life insurance on your mortgage.

Feel free to skip ahead to any section that interests you:

Why You Need to Get Life Insurance on Your Mortgage

If you own a home, then you need to get life insurance on your mortgage to protect your family if you die before the house is paid off.

In today’s economy, many families are living paycheck to paycheck and would struggle to make their bills if they lost their job.

If either income earner dies before the mortgage loan is paid off, your family could quickly fall behind with their mortgage payments.

Real estate markets go up and down.

If you pass away during a “buyers market,” your family may be forced to sell the property at a loss, or even worse, get foreclosed on!

Even if your family manages to sell the property and move into something more affordable, will they want to?

People often choose their neighborhoods based on schools, short commutes to work, and safety.

Do you want your children to switch schools and make new friends because they cannot afford to live in your family home after you’re gone?

As a homeowner myself, I know the amount of work that goes into owning a house.

My home is more than just a piece of land; it is memories that I share with my family.

The last thing I want is for my wife to have to find a new place to live while mourning me, which is why I carry life insurance.

What Type of Life Insurance is Best to Protect Your Mortgage?

In our experience as life insurance brokers, new homers don’t have a ton of free time.

With a never-ending list of home improvement projects, who has time for medical exams and chasing down doctor’s records to get life insurance.

Therefore, we often recommend skipping the medical exam for those who qualify to get your mortgage protected as soon as possible.

A fully-underwritten life insurance policy on average takes 4-6 weeks to get approved and covered.

However, a no-exam life insurance policy can be approved within 48 hours; sometimes instantly!

Another perk of no-exam life insurance is that many of the best no-exam life insurance companies include living benefits for critical and chronic illnesses.

Death is not the only risk that threatens your mortgage.

If you have a hard-hitting disease like cancer, the recovery time can be long and exhausting.

Being able to advance a portion of your life insurance death benefits while you’re still alive gives you a lump-sum injection of cash when your family needs it the most.

Additionally, some life insurance companies offer optional riders for disability payments and return-of-premium options.

These policies are considered the Cadillac of life insurance mortgage protection options since they offer you maximum protection.

However, you need to be in fair to excellent health to qualify for no-exam life insurance.

If you a looking for life insurance with a pre-existing condition, then the exam may be unavoidable.

What if You Are Declined for Mortgage Protection Life Insurance

If you are declined for mortgage protection life insurance, there are options available for you still.

Mortgage lenders offer a version of mortgage protection insurance that has little or no underwriting in most cases.

For people who can qualify for traditional life insurance, this option often is not attractive.

This type of mortgage protection insurance is significantly more expensive than traditional life insurance and has a number of disadvantages.

This type of product usually has a decreasing death benefit that shrinks as your mortgage balance reduces, but your payment stays the same for the duration of your coverage.

Unlike traditional life insurance that is paid to your loved ones directly, this type of mortgage protection insurance gets paid to your lender.

However, it will ensure that your mortgage is covered if you die, and if you cannot qualify for traditional life insurance, it would be a viable alternative.

Another solution would be to buy an accidental death insurance policy for the balance of your mortgage.

These accident-only policies pay out a death benefit like life insurance, but they will only cover fatal accidents, not medical or illness-related deaths.

While not as ideal, accidents are a major cause of death in the United States and strike suddenly and unexpectedly.

Having a plan in place to protect your family from an accidental catastrophe can be the difference between your kids having to switch high schools or finishing senior year.

Lastly, if you cannot ensure the mortgage balance, insure the mortgage payment.

Final expense insurance policies are much easier to qualify for than traditional term life insurance.

Theses small whole life policies are designed to pay for your burial costs and cover any final expenses that you leave behind.

A small whole life policy of $25,000 can cover your burial expenses and leave enough money left over to your family to pay the mortgage for months or even years.

This buys valuable time for your spouse and children while they decide what to do with your property.

There are even guaranteed issue life insurance policies that as no medical questions at all.

As long as you meet the age requirements and pay, they will accept you.

You can combine final expense whole life insurance with accidental death insurance as well.

This way if you die of a non-accident, you can leave family money for a year or two of mortgage payments, and if you die of an accident, you can pay the entire mortgage balance off.

Final Thoughts on Why You Need Life Insurance on a Mortgage

A home is the biggest purchase that many Americans will ever make to live the American dream of homeownership.

Why would you not want to insure the biggest purchase of your life in case you die?

You need life insurance on a mortgage to be certain that if you die prematurely that your family will be set financially and able to remain in a fully paid-off home.

No-exam mortgage protection life insurance offers the best value to cover mortgage balances below $500,000.

No-exam life insurance can be approved in under 48 hours (sometimes instantly).

Also, the best mortgage life insurance companies come with living benefits for critical and chronic illness that protects your home from more than death.

Finally, if you get declined for mortgage protection life insurance, there are other alternatives, like accidental death coverage, that can still provide your family with some protection.

Mortgage protection life insurance is so affordable today that there is really no reason not to have it.

You can use our free rate comparison tool to view the rates of over 50 of the best life insurance companies in the United States.