Every homeowner should know how important it is to buy mortgage life insurance on their home, and to check out mortgage life insurance rates.
If they have no idea what this type of insurance is then they should at least find out and then decide if they want it or not. They will need to make an informed decision to protect their home and family at all costs. And, it would be very unwise of the homeowner not to have this insurance even if they are not happy with the current mortgage life insurance rates. Read also: Life Insurance Rates for Seniors.
Mortgage Life Insurance is a type of insurance designed to protect the homeowner in the event that they die. The home becomes paid for at the time of death and the deceased member will not be leaving them with a mortgage to try to pay off. This insurance will also pay out enough money to rebuild the home in the event that it was destroyed in part or whole. There is another type of mortgage insurance called Private Mortgage Insurance or as some lien holders call hazard insurance. In this type of insurance it will protect the lender if the homeowner defaults on their mortgage payments or the home is destroyed and the homeowner did not have their own insurance.
How Does Mortgage Life Insurance Work?
- The value of the insurance must equal the outstanding amount on the mortgage.
- Termination date will have to be the same date as the last payment due.
- Insurance Company will recalculate the outstanding mortgage.
- If the homeowner has found out they have a terminal illness sometimes the insurance company will pay off the home if death is eminent in 12 months or less.
- Premiums are expensive.
- There are other options not quite as expensive.
- Mortgage Life Insurance is very profitable for lenders.
- Beware of additions to mortgage life insurance such as tied selling practices which are illegal in most states.
- Now required by law.
- Option of the homeowner.
- Mortgage Life Insurance is available if Life Insurance is not possible.
What is Market Value of a Home?
The amount that a person pays for their home and this would also include the land. Read also: Purchasing A Whole Life Insurance Policy To Take Care Of Loved Ones When You Pas.
What is the Replacement Cost of the Home?
- This is how much it would cost to rebuild or do the necessary repairs to the home.
- Replacement cost is not market value.
- Replacement cost is not the purchase price of the home including the land, for example if the home is appraised at $100,000 it is a good idea to insure your home for at least $200,000 in the event that it is destroyed or the owner passes away.
- Replacement cost is not what is owed on the mortgage.
- Is important to get a replacement estimate on the home.
- Pay attention to unique features for customizations of the home and consider this in the replacement cost.
- Take into considerations any updates that have been done on the home; new additions since home purchase, or major remolding of the home; notify your insurance agent of any major updates such as new roof, siding or furnace. Read also: Why You Need Mortgage Life Insurance.
What and Why Would a Replacement Cost Rise on a Home?
- Trending market conditions.
- Increase in labor and materials.
- Area or location of your home.
- Maintain at least a 100 percent replacement cost of the home.
Why Should Everyone Have Mortgage Life Insurance?
Mortgage life insurance covers a multitude of items, such as if your home is damaged or totally destroyed by fire or lightning, a windstorm or hail. If your homes plumbing system becomes frozen and the pipes break causing flooding. It will cover if your home is broken into and items are stolen. Homeowner’s insurance covers bodily injury and or property damage. Read also: 10 Year Term Life Insurance Strategies.
There May Be Claims That Are Not Covered:
Claims stating bodily injury or property damage that is expected, business pursuits, and or any professional services are not usually covered by homeowners insurance. If the homeowner is going to have special work done on their property, such as, a new roof by a roofing contractor then the homeowner will need coverage in case a worker get hurt on the job.
Tailor Your Homeowner’s Insurance According to Your Needs:
A homeowner should check mortgage life insurance rates periodically. A homeowner can design their specific homeowner’s insurance policy with their insurance agent to specification for them. The homeowner needs to understand that all specified coverage is subject to the policy.
It is important that the homeowner understand the value of their home because it is a Hugh investment it should be protected by having the home covered adequately with just the right amount of insurance.It is important that your insurance agent cover your home for 100 percent of what it would cost to replace it should it be destroyed.
From this information a home owner can then buy policy options that are right for them. It is also important to look into the future as the cost of labor and materials are increasing all the time. Get enough coverage to pay for these increases. And, lastly it is a good idea to have your home reappraised as the cost of living increases.
When shopping for homeowners insurance, compare mortgage life insurance rates and quotes from several different companies before picking the company, agent and policy that will fit your needs. Find an insurance agent that will work and connect with your personal needs.