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Freddie Said:

What would be the best option of the mortgage or life insurance in case of serious illness? ?

We Answered:

Everybody is pretty much right. Mortgage Life Insurance is usually a rip-off. It's usually either more expensive or just as expensive as a 30 year term, but you're paying the same premium for 30 years and getting less coverage every year. Plus, if you ever refinance or take out an equity loan or LOC it becomes a giant hassle. If all you're looking for is coverage on the mortgage, in most cases you're best off going with two seperate 20 or 30 year terms depending on the length of your mortgage (one for each spouse).

As far as serious illness, you're pretty much stuck with disability. Do your employers offer disability? If they do, it's often nice to supplement that with a mortgage disability policy that would pay your mortgage directly for you if you became disabled. This is nice because it completely eliminates your mortagage from your budget, and employer disability usually only pays about 60% of your income anyway (albeit, not taxed) so you're on a limited income anyway.

If your employer does not offer disability, then you'd have to buy your own and you'd be better off with a straight disability policy as opposed to mortage disability.

Things may vary slightly in your state, so you'd probably be well advised to talk to a reputable insurance professional in your area.