What Is Mortgage Life and Disability Insurance?

Also known as mortgage life insurance, mortgage life and disability insurance is a term life insurance that borrowers buy to pay off a mortgage in the event of a disability or death. The insurance policy will repay the mortgage or continue to make repayments upon the death or disability of a borrower.

This type of policy is often treated separately–mortgage life insurance and mortgage disability insurance. For homeowners, however, these two go hand in hand.

The mortgage life insurance policy will preserve a property for the surviving loved ones when the borrower dies. It is available in several policies.

  • For a decreasing term life policy, the death benefit of mortgage life insurance decreases with the mortgage balance.
  • For a level term life policy, the borrower is only covered for as long as the mortgage stands. A 20-year term policy, for example, is recommended for a mortgage that is 20 years to pay.
  • Whole life insurance or valuable insurance is designed for purchasers who plan to pay off or redeem the mortgage early.

Mortgage disability insurance, on the other hand, will preserve a property if a borrower is unable to earn a living because of permanent disability. This is recommended for those who intend to live in the same house for the rest of their lives.

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For those who can afford it, the mortgage life and disability insurance should be joined together as one entity. If you are unable to work because of your disability, the mortgage disability insurance on top of the mortgage life insurance policy will provide you with a comprehensive insurance plan.


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