When you sign, your lender will offer you mortgage life insurance. It is a checkbox, but it is not a small decision.
The goal is legitimate: if you die, your family does not inherit a mortgage balance. What deserves your attention is the product being offered to get there — because there are two kinds, and they are not equivalent.
The two options
Insurance offered by the lender. Simple to sign up for, often with few medical questions. The coverage amount declines as your balance declines, the lender is the beneficiary, and the coverage ends if you change lenders. Medical eligibility is sometimes assessed at the time of claim rather than at application.
An individual life insurance policy. The coverage stays at the amount you chose, you name your own beneficiaries, and it follows you regardless of lender or property. Underwriting is more demanding upfront, but the contract is yours.
Questions to ask before you check the box
— Who receives the benefit: me, or the lender?
— Does the coverage decline with my balance while the premium stays the same?
— What happens to the coverage if I change lenders or properties?
— Is medical eligibility assessed now or at the time of a claim?
— Do I already have coverage elsewhere, for example through my employer?
Please note: I am a mortgage broker, not a licensed life insurance representative. I do not sell insurance and I cannot advise you on which policy to choose. What I do is make sure you understand your options before you sign, and refer you to a properly licensed representative if you want to compare.