Saturday, January 16, 2010

How to Decrease Term Mortgage Life Insurance

One of the easiest types of life insurance to get is term mortgage life insurance. Almost every mortgage company offers, or makes available, some form of mortgage protection policy that will pay off the remaining balance of your primary mortgage in the event of your death.

You can obtain this coverage with relative ease, as there is typically little to no underwriting involved. After a number of years, when your outstanding mortgage balance has been decreased, many homeowners consider reducing the total life insurance benefit provided by the policy.

While the general rule of thumb is that there's no such thing as too much life insurance coverage, if you've decided that decreasing the amount of your mortgage insurance policy is necessary and appropriate for your situation, here's how to do it:

Step 1

Determine the appropriate amount of mortgage protection life insurance that you need. Ensure that the total benefit available to you will be sufficient to cover the entire outstanding balance on your primary mortgage.

Step 2

Contact the mortgage life insurance provider. In some cases, larger mortgage servicers have in-house departments dedicated to handling mortgage life insurance policies. However, many smaller mortgage providers refer these policies to larger life insurance companies for management and maintenance.

Step 3

Obtain the policy reduction request form. Most life insurance carriers have standardized forms for addressing client requests regarding a change of or reduction to life insurance death benefits. You can ask the insurance company’s customer service representatives to mail the forms to your home address. In many cases, the carriers have the ability to email such policy service forms, or you may download them from the carrier website.

Step 4

Complete and return the documents. Fill in all required information to decrease the death benefit of your mortgage life insurance policy. Indicate your desired total death benefit in the appropriate section of the form. Mail or fax the form back to the life insurance carrier.


Decreasing the amount of your mortgage term life insurance policy to an amount below the outstanding balance of your account can put your family’s future financial security at risk. It is safer to keep more coverage than necessary to prevent a lack of funds when handling unforeseen expenses.

This article is a Twisted Nonsense Exclusive! (01/16/2010)

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