Life Insurance Mortgage: The Definition
These plans are designed to help interested homebuyers realize their dream of owning a home of their own through affordable monthly premiums. Under this, young people don’t need to pay the whole value of the home in down payment and can choose to pay the same in cheap monthly premiums for some 20 or 30 years. In case of an unfortunate incident, the insured is helped with a partial income to take care of their mortgage installments and the outstanding mortgage loan is waived off if the insured passes away before repaying the debt.
Life Insurance Mortgage: The Breakdown
The offered plan can be further categorized in two: decreasing term insurance and level term insurance.
- Decreasing Term Insurance
Under this type, you need to pay a bigger amount as premiums in initial years and this will be decreasing every year depending on the balance amount of loan. The balance amount decreases each year and ultimately reaches to zero. This type of mortgage is good for people approaching their retirement as they will have to pay lesser during later years of their lives.
- Level Term Insurance
As the name says, this type of plan comes with the same monthly premium throughout the period and the insured needs to pay a fixed amount every month. The offered plan is a good option for the young homebuyers who are going to receive an increasing income throughout their career and can easily manage the premium for their home mortgage.
Why Should You Buy Life Insurance Mortgage?
Life insurance mortgage plans are known for the different benefits it brings for the interested young homebuyers. Below, we are explaining why it is necessary to have such a plan and how it can help the homebuyers ease their lives and secure a home for themselves as well as their loved ones.
- Mortgage Free Home In Case Of Sudden Demise
This comes as the biggest advantage of a life insurance mortgage plan. In case the unexpected happens and the insured passes away before repaying the mortgage for a home, this plan comes as a big relief for them. In that case, the insurer will take care of the outstanding mortgage loan and the insured’s family don’t need to worry about the same. The house will remain on the name of the insured and their loved ones can live with peace inside. Nobody wants their loved ones to suffer even in their absence and hence, this plan can prove a good option to provide a permanent residence to your loved ones.
- Income Assistance In Case Of Illness Or Injury
Another benefit that one can consider buying such a plan is the income assistance provided when they need it the most. Under this plan, the insured has to pay a fixed premium every month but there may be situations when they can’t make it in time. Usually, people fall ill and have to take a break from their jobs or sometimes they get injured and can’t resume the work till they recover completely. In such cases, they might have to miss the mortgage payments which may prove very crucial for them. If you have bought a life insurance mortgage plan, the insurer will help with a part of the monthly income that you can utilize to make the premiums and take care of some essential expenses.
- Peace Of Mind For The Insured And Their Family
Having a life insurance mortgage provides the peace of mind the insured and their family needs. Everyone wants to ensure the peace of mind for their family and loved ones. With such a plan, you can be sure that your loved ones will always have a place to live in, no matter what. The only drawback about such plans is that the premiums must be paid every month and shouldn’t be missed without informing the lender. In case of missing the premiums, the lender has full rights to invalidate the mortgage and the insured will have the risk to lose the house. In case the insured meets an accident and misses the work for a few months, the insurance provider will pay the premiums and keep the mortgage going. This may seem trivial here, but this greatly protects people from losing their dream home.
