Which of the following types of life insurance is normally associated with a mortgage loan? (2024)

Which of the following types of life insurance is normally associated with a mortgage loan?

Explanation: The type of life insurance that is commonly associated with a mortgage loan is Term life insurance (Option a). Term life insurance policies provide coverage for a specified 'term' of time, often matching the span of a mortgage loan (15, 20, or 30 years for instance).

What type of life insurance is associated with mortgage loan?

Mortgage life insurance, also called mortgage protection insurance (MPI) or mortgage protection life insurance, is a type of credit life insurance that covers your mortgage if you die before paying off your home loan. Mortgage protection life insurance protects your mortgage lender and can offer peace of mind.

What type of life insurance is usually purchased in connection with a mortgage loan?

Mortgage protection insurance

Purchase a term life insurance policy for at least the amount of your mortgage. Then, if you pass away during the "term" when the policy's in force, your loved ones receive the face value of the policy. They can use the proceeds to pay off the mortgage. Proceeds that are often tax free.

What type of insurance pays off a mortgage?

As the name implies, mortgage protection insurance (also called mortgage life insurance and mortgage protection life insurance) is a policy that pays off the balance of your mortgage when you die. The death benefit from an MPI policy typically decreases as you pay off your mortgage, while your premiums stay the same.

Is there life insurance for mortgages?

A life insurance for mortgage protection policy is a term life policy designed specifically to repay mortgage debts and associated costs in the event of the death of the borrower. These policies differ from traditional life insurance policies because they are specifically pegged to the mortgage.

Is mortgage insurance life insurance?

In short, both MPI and life insurance give your family financial protection if you die. However, MPI is sold by mortgage companies, banks or independent insurance companies and is meant to pay off the remaining balance on your mortgage. On the other hand, life insurance is available through life insurance companies.

What are the 3 main types of life insurance?

Which type of life insurance is issued in connection with a specific loan or credit transaction in case the debtor dies or becomes unable to pay the remaining debt?

Credit life insurance is a specialized type of policy intended to pay off specific outstanding debts in case the borrower dies before the debt is fully repaid. Credit life policies feature a term that corresponds with the loan maturity.

Which type of life insurance policy is best suited for paying off the outstanding balance of a 30 year mortgage in the event of the insured's death?

Unlike term life insurance, mortgage life insurance typically pays the death benefit directly to your mortgage lender. If your coverage amount is higher than your outstanding mortgage balance at the time of your death, your family will not get any extra money.

Which insurance combines life insurance with an investment account also has cash value withdrawals?

Whole Life Insurance Cash Value

A cash value life insurance policy is similar to a retirement savings account in that it allows investments to accumulate tax-deferred interest. Part of each premium payment goes toward the policy's cash value, which can be withdrawn or borrowed against later in life.

What kind of life policy typically offers mortgage protection quizlet?

Decreasing term insurance is commonly used to protect an insured's mortgage. The amount of accumulated funds at any given time is referred to as the cash value. The face value (aka death benefit) is the amount of insurance proceeds the policy pays to your beneficiaries upon your death.

What is the difference between mortgage insurance and life insurance?

While mortgage life insurance can protect you—the borrower—and their heirs, mortgage insurance protects the lender if the mortgagor isn't able to fulfill their financial obligations.

What is primary mortgage insurance?

It typically applies to borrowers whose down payment on a home is less than 20 percent of the purchase price. Although the borrower is paying for it, PMI actually is protection for the lender: It compensates them for the extra risk they're assuming by extending a larger loan, and demanding less cash upfront from you.

How much is mortgage life insurance?

What are the 4 main types of life insurance?

Which type of life insurance is the most basic _____?

What is a life insurance loan called?

A policy loan, issued by an insurance company, uses the cash value of a life insurance policy as collateral. Also called a "life insurance loan," it often has lower interest rates than a personal loan and you can use the money for any purpose.

Which type of life insurance policy can policy loans be created from?

Pro tip: Life insurance loans are only available on permanent life insurance policies — such as whole life and universal life — that have a cash value component.

What type of collateral is life insurance?

Collateral assignment of life insurance is a method of providing a lender with collateral when you apply for a loan. In this case, the collateral is your life insurance policy's face value, which could be used to pay back the amount you owe in case you die while in debt.

Which type of life insurance policy is best suited?

If budgeting is your biggest concern, term life insurance may be the best choice. If you have many dependents, whole life insurance may be a better route. However, if financial planning and cash value are most important to you, universal life insurance may be a strong option.

What type of life insurance gives the greatest amount of coverage?

Term insurance is initially cheaper than other types of policies that offer the same amount of protection. Therefore, it gives you the greatest immediate coverage per dollar.

Which type of life insurance policy would most likely be used to insure the declining balance of a home mortgage?

Both mortgage protection insurance and credit life insurance are variations of decreasing term life insurance. These policies cover your mortgage or other personal loan balance if you die before it's paid off. The death benefit typically goes to the lender, meaning your loved ones won't get any money.

Which type of life insurance policy combines insurance protection with an accumulation of cash value?

Permanent life insurance goes by several names, such as universal life, variable universal life and whole life. Permanent insurance provides long-term financial protection. These policies include both a death benefit and, in some cases, cash savings.

Which type of life insurance policy combined insurance protection with an accumulation of cash value?

Variable life insurance is a permanent life insurance policy combined with a cash-value account invested in bonds or stocks. In contrast, term life insurance lasts for a specific number of years, a variable life insurance policy lasts until the policyholder's death.

Which of the following life insurance policies combined term insurance with an investment element?

Universal life is a type of permanent insurance policy that combines term insurance with a money market-type investment that pays a market rate of return.