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How can I purchase insurance to pay off my loan in case of death?

Jan. 10, 2007

Home Insurance Forum

Question:
How can I purchase insurance to pay off my loan in case of death?

Norma, Delaware

Answer:
Dear Norma,

Mortgage protection insurance will pay off your mortgage in case of death. But that's all it pays for, and as you pay off your mortgage, the benefit of having this type of insurance decreases. Look at our story on how Mortgage protection insurance offers limited benefits.

Another option is credit insurance, which is designed to pay your bills in the case of death, but like mortgage insurance, the benefits are limited. See our story on Beware lenders bearing credit insurance policies.

Generally speaking, a standard life insurance policy is your best choice, because your family can use it for anything, from funeral expenses to mortgage payments and outstanding bills. We have a whole section devoted to life insurance, but a good place to start is our Life insurance basics.

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Disclaimer: We are journalists, not financial planners or insurance brokers. Nothing we say should be interpreted as a recommendation to buy or sell any insurance product, or to provide other financial or legal advice.

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