Mortgage Life insurance is one of two types of life insurance. Mortgage life insurance is usually taken out alongside a mortgage. Mortgage life insurance is a decreasing form of life insurance and is designed to protect the repayment of a mortgage. As your mortgage decreases so does the amount of life insurance received when the insured has unfortunately passed away.
The amount of life insurance cover decreases over the duration of the plan by a percentage agreed when the insurance cover was taken out. Mortgage life insurance is to last the lifetime of the mortgage so if you pay off the mortgage and the insured continues to be well and live past the end of the insurance term then no payout will be received. If the insured were to unfortunately die soon after taking out mortgage life insurance then the beneficiary would receive a higher payment than if the insured was to die towards the end of the plan. Mortgage life insurance is taken out alongside a mortgage as the idea is that when the insured dies then the beneficiary of the life insurance policy is able to pay off the mortgage left on the home and it leaves them with one less worry.
It is advised that if you take out a mortgage life insurance plan that your agreed payout is slightly more than the cost of the mortgage so as to help with other everyday costs that the loss of your loved one has made a struggle to meet.