Similar to a regular life insurance policy, mortgage life insurance is a product designated exclusively for paying the mortgage in the event that the policyholder passes away before the debt has been fully repaid. After a mortgage life insurance policy is purchased, a minimum payment amount will be assessed to keep the policy active. The insurance company decides how much these payments will be, based on how likely the policyholders are to pass away. Failure to make these payments results in expiration of the policy, and the beneficiaries will not receive the money upon the policyholder’s death. If there are two people responsible for repaying a mortgage loan and these borrowers do not have a mortgage life insurance policy, one person will be solely responsible for repaying the loan if one of the borrowers dies. A mortgage life insurance policy prevents this from occurring.
