Read this tip to make your life smarter, better, faster and wiser. LifeTips is the place to go when you need to know about The Basics of Mortgage Insurance and other Mortgage Protection Insurance topics.
One of the best benefits of a Mortgage Insurance Policy is that it allows your death benefit proceeds to go directly from the insurer to your beneficiary(ies) without going through the lengthy and difficult process of probate. This gives your beneficiary(ies) the opportunity to stay current with not only the mortgage, but also everyday household expenses and bills, funeral/burial expenses, and other financial needs. This can provide a lifeline while they wait for all of your other assets to go through probate.
If you do not name any beneficiaries on your Mortgage Insurance Policy, and instead leave the beneficiary(ies) area blank or name the estate as beneficiary, then your mortgage insurance proceeds will need to be probated, which could leave your intended beneficiary(ies) in a financially precarious position.
If you want a bit more control over how your mortgage insurance proceeds are handled after your passing, you can always name a trust as your beneficiary. You'll then be able to spell out the specific terms of exactly what you want accomplished with the mortgage insurance proceeds. This will help by avoiding probate altogether, while still offering you a layer of control over your mortgage insurance proceeds and other assets.