When Mortgage Life Insurance is Better Than Term Life

Mortgage life insurance can sometimes suit your needs better than term life insurance. Mortgage life insurance is a special type of policy that pays off your mortgage if you die. In most cases, mortgage life insurance pays directly to the mortgage lender, which means the policy has a diminishing payout over the course of the mortgage. Read our guide below to learn when mortgage life insurance is better than term life.

UPDATED: Jan 3, 2023

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UPDATED: Jan 3, 2023Fact Checked

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. Through her years working in th...

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Written by Melanie Musson
Published Insurance Expert Melanie Musson

William Lemmon has been a licensed insurance agent for over 12 years. He is the principal broker and owner of Broadway Insurance Services in Los Angeles, CA. He works one-on-one with clients to create personalized plans that minimize risk and maximize savings. Being one of the foremost authorities on Airbnb and home-sharing property insurance, Lemmon offers his clients first-hand guidance on how t...

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Reviewed by William Lemmon
Principal Broker William Lemmon

UPDATED: Jan 3, 2023

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.

Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.

UPDATED: Jan 3, 2023

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.

Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.

UPDATED: Jan 3, 2023Fact Checked

Mortgage life insurance is a special type of policy that pays off your mortgage if you die. In most cases, mortgage life insurance pays directly to the mortgage lender, which means the policy has a diminishing payout over the course of the mortgage. For some people, mortgage life insurance may be available in situations where other types of insurance are not, making mortgage life insurance more accessible to a broad range of needs.

No Mortgage Life Cash Value

A mortgage life policy is a type of term life, meaning that it does not have a face value. The policy is written for a specific number of years, based on your specific mortgage terms. If something should happen to you, the remainder of the mortgage would be paid off, leaving your family with a home to live in. If you should decide to sell the home, you cannot get any of the money you have paid into a mortgage life insurance policy back.

Insurance Restrictions

If you have trouble getting a term life insurance policy to cover your mortgage because of age or health restrictions, a mortgage life insurance policy may be your only recourse. Because the policy is written for a specified value, it is usually easier to get than traditional term policies, and you will not have to undergo a medical exam to qualify for most mortgage life insurance policies. For those with pre-existing conditions, this option will give your family peace of mind.

Where Term Life Fails

Term life insurance has medical requirements which affect the rates and length of the policy. To get a mortgage insured, you may need to go outside some of those requirements, such as being accepted for coverage at an advanced age. The idea is that everyone who has a mortgage needs to be able to protect that home for their family, so mortgage life insurance provides a limited use, affordable alternative to term life insurance products.

People with Medical Conditions

Even people with diabetes or asthma have a right to own their own home, and owning a home means you need to be able to protect the mortgage. Since preexisting medical conditions are often a roadblock to term life policies, mortgage life insurance will guarantee your family’s home will remain in the family even if you are not able to be there first-hand.

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Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.

Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. Through her years working in th...

Full Bio →

Written by Melanie Musson
Published Insurance Expert Melanie Musson

William Lemmon has been a licensed insurance agent for over 12 years. He is the principal broker and owner of Broadway Insurance Services in Los Angeles, CA. He works one-on-one with clients to create personalized plans that minimize risk and maximize savings. Being one of the foremost authorities on Airbnb and home-sharing property insurance, Lemmon offers his clients first-hand guidance on how t...

Full Bio →

Reviewed by William Lemmon
Principal Broker William Lemmon

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