Do you need life insurance to get a mortgage?

Mortgage lenders don't require that borrowers have life insurance, but they offer borrowers the option of purchasing mortgage life insurance. A mortgage life insurance policy names the mortgage lender as the borrower's beneficiary. If the borrower dies, the lender uses the insurance money to pay off the loan.

Mortgage life insurance is an option for borrowers who want to avoid having their survivors be responsible for paying off a mortgage in the event the borrower dies. However, there may be a better way to achieve the same goal.

Consumers should compare the cost of mortgage life insurance to the cost of term life insurance. Term insurance is often less expensive, and it gives beneficiaries the option to use the money however they want.