best insurance stock - How does mortgage life insurance work : The best way to think of mortgage life insurance is that it is term life insurance with a single purpose: to payoff your mortgage in the event of your death.
A mortgage life insurance policy is tied to your mortgage in almost every way. At the time that you take your mortgage, whether on a purchase or refinance, the death benefit on insurance policy is set up to match the amount of your mortgage loan.
A mortgage life insurance policy is tied to your mortgage in almost every way. At the time that you take your mortgage, whether on a purchase or refinance, the death benefit on insurance policy is set up to match the amount of your mortgage loan.
However, the death benefit will decline as your mortgage is paid down. Once your mortgage is paid off, the life insurance goes away.
In the event of your death, the proceeds of the policy will go right to your lender to payoff the mortgage on your house.
As to the specifics, there are variations depending on which insurance company you use as well as the particulars in your situation. It’s also important to remember that while a lender may recommend that you get mortgage life insurance, you are not required to get it. It is strictly optional coverage.