Is it normal procedure to take out this type of insurance on a house?

Question by JD: Is it normal procedure to take out this type of insurance on a house?
a few years ago a friends father passed away and the family was unaware of a few things. One being if there was a insurance taken out on the house that said if the home owner died everything was paid off?

My friend was unaware of this type of insurance but recently found out when the family hire a company to start getting everything transferred over into the wifes name.

they also said that if they do infact have this insurance, the bank will have to pay everything back from the point of when the home owner died.

Can anyone shed some light on this?

Best answer:

Answer by Jeanbug
It’s called mortgage insurance and yes, it’s very common though not a whole lot of people take advantage of the policy.

if the wife continued to make payments and indeed there was a policy in place, she should be entitled to a refund of the payments made. Why is a “company” handling the transfer of title and not an estate attorney?

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2 comments to Is it normal procedure to take out this type of insurance on a house?

  • Falcon

    yes its important to have a mortgage insurance on your house this insurance protect you / lender in south africa the bank must take a mortgage policy its law and its good to take a joint family policy should any one die then the mortgage is paid

  • mbrcatz

    No, it’s not normal, and most people don’t have this type of insurance.

    It’s “mortgage life insurance” – effectively decreasing term life insurance. It’s true, that as long as the coverage was in force at the time of death, AND the insured didn’t lie on the application, it will pay out the mortgage balance as of the date of death (minus late fees, missed payments, etc.).

    But if there’s a question as to whether or not they have this type of insurance – they probably don’t have it.

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