How mortgage protection insurance works:
Just as this name implies, mortgage life insurance is one that pays off the balance of your mortgage should the unfortunate happen to you leading to your death.
This policy is most of the time sold through banks and or mortgage lenders.
The main reason behind lenders liking mortgage protection insurance soo much is very simple; they are the very people who get paid should you die. The death benefit of the life insurance lands in the hands of the people you choose to benefit however with a mortgage protection policy, the person who benefits is the lender. That is, he would be paid his money should you die.
Your family stands the chance to only get a benefit indirectly. For instance, if you owe $100,000 on your mortgage, the mortgage insurance company pays it off leaving your property out of any debt. Your family has no opinion on how the money is spent isn’t that serious?
Because your mortgage goes down with time as you make your payment, that would mean the death benefit of your mortgage protection insurance also goes down as well.
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