Describe mortgage protection life insurance.(1 point) Responses an insurance that pays out when there is an accidental death or loss of functionality an insurance that pays out when there is an accidental death or loss of functionality a contract that helps pay for repair or replacement due to normal use once the object is outside the original coverage period a contract that helps pay for repair or replacement due to normal use once the object is outside the original coverage period a type of insurance that pays off the balance of a mortgage in the event of the death of the mortgage holder
a type of insurance that pays off the balance of a mortgage in the event of the death of the mortgage holder.
Mortgage protection life insurance is a type of insurance that pays off the balance of a mortgage in the event of the death of the mortgage holder. It provides financial protection to the loved ones of the mortgage holder by ensuring that the mortgage debt is cleared in the unfortunate event of their passing. Here's how it works:
1. Determine your mortgage coverage needs: First, calculate the total amount of your outstanding mortgage debt. This will help you determine the coverage amount you need for your mortgage protection insurance.
2. Research insurance providers: Look for insurance companies that offer mortgage protection life insurance. It's important to compare different providers to find the best coverage and rates that suit your needs.
3. Apply for coverage: Once you've chosen an insurance provider, you'll need to complete the application process. This typically involves filling out a form, providing personal information, and answering some health-related questions. The insurance company will evaluate your application and determine your eligibility for coverage.
4. Pay regular premiums: If your application is approved, you'll need to pay regular premiums to maintain your mortgage protection life insurance. These premiums are typically based on factors such as your age, health, and coverage amount.
5. Determine the payout structure: You can choose between two different types of payout structures for your mortgage protection life insurance. The first option is decreasing term insurance, which means the coverage amount decreases over time as your mortgage balance decreases. The second option is level term insurance, which means the coverage amount remains the same throughout the policy term.
6. Understand the exclusions and limitations: Like any insurance policy, mortgage protection life insurance may have exclusions and limitations. It's important to carefully review the terms and conditions of the policy to understand what circumstances are covered and what are not.
In the event of the mortgage holder's death, the insurance company will pay out the coverage amount directly to the mortgage lender, clearing the outstanding mortgage balance. This can provide financial peace of mind to the mortgage holder's family and help them avoid the burden of mortgage payments during a difficult time.
It's worth noting that mortgage protection life insurance specifically focuses on paying off the mortgage, whereas traditional life insurance policies provide broader coverage and can be used for various financial purposes.