Because mortgage life insurance is a type of group insurance, it is owned by the lender who has the ability to cancel the group policy at any time.
The mortgage lender or financial institution is the sole beneficiary of mortgage life insurance, as well as the owner. The lender will use the death benefit proceeds to pay down the remainder of the mortgage.
Mortgage Life Insurance premiums do not take health into account.
If you have Mortgage Life Insurance and you switch lending institutions, you must reapply for coverage.
Your mortgage insurance expires once the mortgage is paid off.
Not guaranteed. Mortgage insurance is not underwritten until a claim is made, so they don't decide whether to cover you until you're already dead!
As the amount of your mortgage decreases, your coverage drops as well. However, you have to keep paying the same premium, meaning that over time you get progressively less value for your money. With mortgage life insurance, the death benefit pays only the balance of the mortgage in the event of death.
Should both spouses pass away, the bank or lender will use the death benefit only to pay down the remainder of the mortgage. Essentially, the death benefit is paid to the lender and the policy owner's family does not receive anything beyond the knowledge that the mortgage is paid off.
In the case of bank mortgage insurance, underwriting is done at the time of death. In some cases, mortgage insurance is offered with minimal background checks. This can result in major problems if the bank's insurer decides to dispute the claim.
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