Mortgage Life Insurance

Mortgage Disability Insurance will help pay the total or partial monthly mortgage payments in the event the borrower is unable to work due to sickness, accident or injury. While it is available with most mortgage loans, it is not mandatory to purchase the coverage. The primary reason most borrowers buy this insurance is to protect their credit rating and not place additional strain on the household budget in the event of disability.

Mortgage insurance and homeowners' insurance are not the same thing. Mortgage insurance protects your financial institution or lender in the event you default on your mortgage. Depending on the type of mortgage insurance you have, it can cover mortgage payments in the event of injury, death, disability or job loss.

Mortgage insurance is mandatory when you put less than 20% down when purchasing a home. If you put down 20% or more, mortgage insurance is not required.

Mortgage insurance and life insurance are two separate products. Mortgage insurance is mandatory when you put less than 20% down when purchasing a home. If you put down more than 20% and have life insurance, consider reviewing your policy to ensure that it can cover the cost of your mortgage and other expenses. Discuss with your lender what options would work best for you.

Mortgage insurance is calculated as a percentage of your total mortgage and takes the size of your down payment, or loan-to-value-ratio, into consideration.