What is Term Mortgage Insurance?

C. Daw
C. Daw
Man with hands on his hips
Man with hands on his hips

Many businesses choose the option of purchasing a term mortgage insurance policy for their business. The reason for this insurance is to help the business have the financial resources available to help them continue their operations if the owner or other specified key players in the business were to die. The main way this insurance provides this coverage is that it will pay off the remainder of the business’s mortgage in the event that one of these deaths were to occur. This insurance can give the business an added sense of security and may be required by the mortgage company.

Term mortgage insurance policies can be very beneficial to businesses, especially small companies where their primary resources come from the owner or other key figures within the business. The continuous operations have a possibility to cease if the owner were to die before the mortgage is paid in full. By freeing up the money spent on the mortgage payments, the business will be able to continue to have a cash-flow available. A company owner may opt to have a private mortgage insurance policy on their private home as well.

Term mortgage insurance policies can be purchased by two methods. One of the methods is done by basing the premiums to be paid on the amount of the mortgage that must still be paid off. This usually results with a high starting premium and they will gradually be reduced as the mortgage decreases. However, with term mortgage insurance, the policy is set to be held for a predetermined amount of time, which is usually a 20, 25 or 30 year term for a set price. The policy is set up using the current amount of mortgage that is left on the business at the time that it is established. A premium is set that will be continuous throughout the term of the policy.

These rates are cheaper than the other mortgage insurances and they are guaranteed throughout the term. The policy ends when the term mortgage insurance expires, whether it was used or not. By this time, the insurance policy should no longer be needed because the business’ mortgage should have been paid in full. Many business choose this option because it comes at a greatly reduced price, and they like the fact that the premiums are consistent and they do not need to worry about them being raised over the years.

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