Mortgage Life Insurance: Do You Need It?
What your lender offers at signing, how it differs from term life, and questions to ask.
When you sign your mortgage, the lender will probably offer mortgage life insurance. It pays off some or all of your mortgage if you pass away.
It's optional. You don't have to buy it to get your mortgage.
The big differences from regular term life insurance: with mortgage insurance the lender is paid, not your family, and the payout usually shrinks as your mortgage balance goes down while the premium often stays the same.
Some lender policies are also underwritten at claim time, which means they check your health when a claim is made. Ask how it works before you sign.
Plenty of people compare it with a personal term life policy. Either way, it's worth a quick chat with an independent advisor.
Inspired by What Is Mortgage Life Insurance? on REALTOR.ca's Living Room blog. Further reading there.
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