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Mortgage Life Insurance vs Decreasing Term Life Insurance

A typical Mortgage Life Insurance policy is a special type of insurance policy that is specifically created to ensure your mortgage loan is repaid in the event of your death. With this policy, there is no extra money leftover after the capital sum amount remaining on the mortgage loan is paid.


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A Decreasing Term Life Insurance policy is not necessarily the same as Mortgage Life Insurance. In fact, Mortgage Life Insurance is a type of Decreasing Term Life Insurance. This is because Decreasing Term Life Insurance is any life insurance policy that decreases in value with each passing year. A Decreasing Term Life Insurance policy may be used along with a mortgage, but it can also be used alongside any debt that the policyholder may have. This can include credit card debt, student loans, or any other debt that decreases with each passing year.

Both a Mortgage Life Insurance policy and a Decreasing Term Life Insurance policy decrease in value as each year passes. This is because both types of policies are intended to cover the amount of a specific debt. Since the debtor is expected to be paying toward the debt in an effort to pay off the loan in full, the total amount of debt owed should decrease every year. As such, the amount of coverage needed by the life insurance policy should also decrease.

Another similarity between the two types of life insurance is the fact that the policies are often set up to pay out a guaranteed amount of money if you are diagnosed with a terminal illness and are expected to live less than 12 months. In this way, you can make funeral arrangements with your family and plan ahead for your financial needs.

Although the amount of the payout of a Mortgage Life Insurance policy or of a Decreasing Term Life Insurance policy decreases over time, the amount of the premiums generally stays the same during the lifetime of the policy. This is helpful to those that need to stick to a strict budget, as there are no surprises regarding the amount of the premium from year to year. At the same time, the amount of your premiums are calculated based on the amount of the loan or mortgage covered, so there is no need to feel as if you are paying an unfair amount toward your premium as the amount of your debt decreases.

In some cases, a lender will require that you carry some form of decreasing Term Life insurance; this is particularly true in the case of a mortgage. In fact, many lenders will offer this coverage directly through them. In many cases, this is not the best option when it comes to cost effectiveness. By finding your coverage on your own, you have the ability to shop around and to find the best price possible. In addition, you can add other options to your policy that will keep you and your family further protected.

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