Term Life Insurance Articles
How Term Life Insurance Can Help Homeowners Find A Mortgage Company
2010-02-09
Term life insurance isn't just a way to protect a policy holder's family and dependents. It can also be a valuable tool for insuring a mortgage, and can help homeowners find lower rates and more options when buying a house (or any other type of property). This is especially true for older individuals. A term life insurance policy is taken out for the length of the mortgage, and the mortgage company or bank is named as the beneficiary on the policy. If the new homeowner dies before the mortgage is paid off, the term life insurance policy pays off the property. Life insurance policies have been used in this way for many years, and mortgage companies prefer giving loans to persons with term life insurance, since it means less of a risk for their investment. Some companies even require a policy before they'll offer a mortgage, and may even offer term coverage as well as mortgage services.
A special type of term life insurance, known as "diminishing return term life insurance" is used for mortgages. These policies offer lower and lower payouts each year as the total amount owed on the mortgage decreases. As such, they're not very good life insurance policies for anything other than mortgages and other major purchases, but they offer lower rates than standard level term life insurance policies, and they're typically very affordable. Many diminishing return policies will not require a physical, but they'll typically require some sort of statement of health.
Homeowners and potential homeowners can see lower mortgage costs and more mortgage options by looking at some term life insurance quotes before heading into a lender's office. Understanding the potential costs is key, as a mortgage won't necessarily be less expensive with an attached diminishing return policy in every case. Mention a potential term life insurance policy to your lender, and discuss how your interest rates and mortgage payments could change with an added life insurance policy. They'll often be more than happy to discuss the possibility, and you may be surprised at the difference in costs.
You should consider some form of life insurance whenever applying for a mortgage, particularly if you're 40 or older or if you've had difficulty finding a mortgage lender in the past. The benefits of a policy can be substantial, so it's certainly worth investigation. When looking at life insurance policies, carefully read all attached terms, and be sure to look for more than one term life insurance quote. Rates vary quite a bit, so it's worth your time to shop around and discuss options with your lender.
