What is mortgage insurance?

When acquiring a property, the new owners will take out a mortgage via a loan. The lender can then ask the borrower to submit to a mortgage insurance to protect their investment. Find out in this text what is the protection offered by mortgage insurance, what is life insurance and other things that encompass the concept of this type of insurance.

Is mortgage insurance compulsory when buying a house?

Not all new homeowners are required to purchase mortgage insurance. On the other hand, the lender of the mortgage can require the borrower to take out mortgage insurance in order to provide protection for his investment.

What is mortgage insurance protection?

This insurance protection is used when the borrower cannot issue a payment for the mortgage. Failure to pay may be caused by death or medical disability. The terms of protection may vary depending on the type of mortgage insurance that covers the lender and the borrower. Either mortgage life insurance or mortgage disability insurance.

In addition, unlike the types of insurance available on the market, mortgage insurance protects you in the event of a payment default caused by any financial difficulty.

What is mortgage life insurance?

Life insurance provides continuity to your investment in the event of death. That is, your beneficiaries can use the money to cover more than just the mortgage. When writing the contract for your life insurance, it provides a tax-free sum of money that will go to your designated beneficiary or beneficiaries for your home. These are generally attributed during the drafting of your will accompanied by a notary. In short, here is what the estate can settle and do with the amount of money left:

  • Cover other of your debts
  • Coverage of funeral expenses
  • Cover the mortgage
  • Cover children’s expenses and studies
  • Be used to pay for other living expenses (recipients are then free to do as they see fit with this money)
And in the case of simple mortgage insurance, where does your money go?

In this case, if you do not have an established estate, the mortgage insurance will only cover the mortgage costs. So, in the event of death the money will return either to the bank with which you made your mortgage loan or to the mortgage lender. The money will therefore end up in the hands of the financial institution that made the loan.

Is it possible to transfer your simple life or mortgage insurance contract?

In the case of mortgage insurance, it will not automatically follow you if you change the lender for your mortgage. In addition, the new lender may give you a medical test to prove that you are in good health and that you do not present a risk to him.

As far as life insurance for your mortgage is concerned, you can transfer your contract without too much hassle to your new mortgage lender. Indeed, the latter, unlike mortgage insurance, does not require medical evidence in order to proceed with the transfer.

This offers greater long-term freedom in the event of a change of institution for the mortgage loan.

To conclude, it is important to remember that mortgage insurance will cover you financially in relation to your mortgage, by returning your investment to the bank or lender in the event of death. While life insurance for your mortgage will also come to protect you in the event of financial difficulties. While leaving the investment in the hands of a designated beneficiary or beneficiaries.

Leave a Comment