Are you trying to decide between life insurance and mortgage protection insurance? Here are the key differences between these two policies and some tips on how to make the right choice.
Whether it’s life insurance or mortgage protection insurance, purchasing insurance is a very effective way of managing risks. When you buy insurance, you transfer the cost of a potential loss to a company in exchange for a premium. The company then pays you when there’s a claim.
Depending on which type of insurance you purchase, it can help you:
- Buy and own a home.
- Ensure financial stability for your family in case of your unexpected death or illness.
- Cover health care costs (eg. dental or vision checkups)
- Provide for your loved ones in some of life’s most difficult moments
Mortgage Protection Insurance
At AIME, we understand just how important financial stability is to you and your family. That’s why we offer affordable, flexible, and transparent mortgage protection insurance, as well as disability and critical illness coverage to ensure your loved ones are protected, no matter what difficulties come your way.
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Life Insurance vs Mortgage Protection Insurance: Which Do You Need?
If you have reached the position in your life when you’re ready to buy a home, then you need to seriously consider purchasing products such as life insurance and mortgage protection insurance. Both coverages provide peace of mind that should something happen to you, your loved ones will have the financial protection they need.
But which product is right for you?
Mortgage Protection Insurance
While it can be very exciting to own a home, being a homeowner comes with a huge financial responsibility and if tragedy were to strike, and you were to die before paying this loan off, your spouse could be burdened with this huge debt.
Mortgage protection insurance was designed for a situation just like this: to pay off your mortgage in full so that your family and loved ones are not forced to shoulder the debt, or even worse, sell the home.
When should I buy mortgage protection insurance?
In most cases, mortgage protection insurance is bought at the same time as the purchase of a home. However, it can be reviewed and/or replaced at any stage during the term of your mortgage.
Note: Over the years, the amount paid upon your death will decrease along with the balance of your mortgage.
Life Insurance
Unlike mortgage protection cover, life insurance can be purchased at any time throughout your life. The two most common types of life insurance are whole and term life insurance.
- Whole life insurance: This requires you to pay premiums throughout your lifetime.
- Term life insurance: This will last for a predetermined period of time, typically between 10-35 years.
Key Differences Between Mortgage Protection Insurance and Life Insurance
When you are deciding between these two types of insurance, it’s important to understand that the key difference between them is that mortgage protection cover is designed to specifically cover mortgage repayments in the event of your death.
In addition, a life insurance policy differs from an MLI because the cover remains the same throughout the life of your policy. This may make life insurance more suitable as an additional cover, which works best together with a mortgage protection cover.
How Do I Choose Between the Two?
Contrary to popular opinion, you do not need to choose between life insurance and MLI. Most people choose to supplement their mortgage protection cover with term life insurance. This ensures that you’ll have peace of mind that your mortgage repayments will be taken care of, whilst also knowing that your family will have additional financial security for other expenses.
Call Today
At AIME, our licensed agents can help you go through all your options and help decide which policy, or policies, are best suited for your individual needs and lifestyle. To find out more, contact us today at 1-844-974-2020 or fill in our online contact form.
