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8 Answers

Mortgage and Life insurance?

Asked by: MarcS 269 views Insurance , , ,

My fiance has just bought a house. Due to my extremely bad credit I couldn’t go on the mortgage. So it is solely in his name, although I will be paying half the payments. We have been advised to take life insurance which my fiance will definitely be doing.. but if I take out life insurance also to cover the mortgage if I die, will it pay out if I’m not actually on the mortgage? As I don’t see the point that if the worst happens.. they won’t even pay out to cover it?!

8 Answers



  1. niceguy on Oct 14, 2012

    Life insurance is paid to a beneficiary, what they do with the money is up to them. If you died, he could choose to disappear with the money if he wanted. Insurable interest is only necessary when writing coverage, not at the time of collecting. So, if you can show that you are married and have a familial debt of X, you can get insurance for X (actually more, but I’m just explaining). They don’t care if the debt is in one name or the other.

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  2. 1kylady on Oct 14, 2012

    Never take life insurance that comes with the mortgage. Take separate life insurance policies. Get 30 year term policies that have level payments for 30 years and a level death benefit. You each name the other as beneficiary (and make sure to make contingents too, just in case) in case anything happens then the other can pay off the mortgage. But really they can do whatever they want with the money, but you or they would probly pay bills and the mortgage. Never take credit life insurance. Always take 30 year term with level premiums and a level death benefit.

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  3. Murzy on Oct 14, 2012

    You are confusing life insurance with life assurance. Any financial adviser who doesn’t know the difference should be ignored as incompetent.No one can insure his own life (that would be life assurance), so it is impossible for your fiance to do that. You, on the other hand, can take out insurance on his life in that you have an insurable interest in his survival.

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  4. TF on Oct 14, 2012

    life insurance to pay off a mortgage is a poor idea. it is crazy expensive. you can always purchase life insurance and your fiance can be the beneficiary. He can then use the proceeds to pay off the mortgage. What I am saying is just buy plain vanilla life insurance. No need to designate it to pay off mortgage loan.

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  5. IdalisE on Oct 14, 2012

    I suggest you do NOT take the life insurance option that came with the mortgage. Instead, shop for term life insurance separately. The reason the bank suggested the life insurance is because they make a ton of money by selling it to you.Shop around for term life insruance and you’ll find that you get MUCH better coverage at a much lower price by simply buying a separate policy.

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  6. vince on Oct 14, 2012

    Yes, as long as you pay the insurance premiums, the policy should pay out to a beneficiary and the beneficiary will be responsible to pay the loan. Do not make the lender the beneficiary!

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  7. Tori on Oct 14, 2012

    It is immaterial what you spend the proceeds of life assurance on. If you were to die, the proceeds would be paid to whoever your will stated to use on anything they wish.

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  8. TE on Oct 14, 2012

    Get term life insurance. Do not tie life insurance with your mortgage company. Just dont.

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