Buying Temporary Life Insurance for Your Mortgage

Temporary life insurance for a mortgage, often referred to as mortgage life insurance, is a policy designed to cover the outstanding balance of your mortgage in the event of your death during the term of the loan. 

This type of insurance ensures that your family or dependents won't be burdened with mortgage payments, providing financial security and peace of mind. The coverage is much more affordable than permanent life insurance options. 

 

What is Temporary Life Insurance for a Mortgage?

Essentially, it’s a type of level term life insurance plan designed to cover your mortgage balance for a specified period. 

Unlike permanent life insurance, which provides lifelong coverage, temporary life insurance offers coverage for a set term—typically 10, 15, 20, or 30 years—corresponding to the length of your mortgage loan.

This type of insurance serves as a financial safety net to ensure that your family can continue living in your home even if you pass away unexpectedly. 

The primary purpose is to cover your mortgage so that your loved ones aren't burdened with payments they may struggle to afford on their own.

 

How Does It Work?

The way temporary life insurance for a mortgage works is fairly straightforward. 

You choose the coverage amount that matches your mortgage balance and the term length that aligns with your repayment period. 

If you pass away during the term of the policy, your beneficiaries receive a death benefit that they can use to pay off the mortgage.

 

How Much Does It Cost?

It's important to understand the various aspects involved, including the cost. 

Premiums for temporary life insurance are typically much more affordable than for permanent life insurance. 

The amount you’ll pay depends on several factors such as your age, gender, health, tobacco use, lifestyle, occupation, hobbies, driving record, the coverage amount, and the term length.

For a rough estimate, consider that a healthy 35-year-old non-smoker might pay around $20 per month for a 20-year policy with a $500,000 death benefit. Your actual cost may vary, so it's worth obtaining several quotes to compare your options.

Learn more about buying temporary life insurance for your mortgage.