Are there any type of mortgages where I can use my life insurance as collateral?, Pay interest only till death

Question

Thank you Diane C. That is excatly what my question was about. You were a great help.

Answer 1

Not any standard mortgages.  You might find a private investor willing to do that, but probably not, as it's not a very good investment.

Answer 2

This is a very interesting question.

A mortgage loan is secured by the property, and a lien will be on the property from the mortgage company, if you made the bank your beneficiary on your whole life insurance policy to guarantee full payment of the mortgage at your death, meanwhile you pay interest only to the mortgage company until your death???  Your heirs would own the house at your death because the mortgage is paid in full.

I don't know if that is practiced.  You could certainly present it to a local mortgage company and let them review your offer. Most banks offer term life mortgage insurance that pays off your mortgage at your death.  Term meaning the death benefit decreases on the life insurance policy as you make principle payment on the mortgage, the mortgage company is the beneficary and these premiums are added to your mortgage.  Your heirs would own the house at your death because the mortgage is paid.

If I were the mortgage company I would be concerned that at anytime you did not make your whole life insurance premium this mortgage agreement would be null and void. Also, Privacy laws can prevent your mortgage company from knowing if you the owner of the whole life insurance policy changed beneficiaries.  Even if your whole life insurance policy was a "paid up for life" type and you were fully vested, it still does not stop you from changing the beneficary at anytime. Yet, honestly why couldn't the whole life insurance policy be secured legally the same way a term life mortgage policy is secured in that the bank manages the policy?

If your whole life insurace policy has equity, you might be able to borrow against your policy, apply the proceeds towards your mortgage to decrease the principle mortgage.  You would have to read your whole life insurance policy to see what the terms and conditions are for borrowing against equity in your policy. They may assess an interest fee for borrowing, but I've known of policies that if the fee's are not paid it would merely decrease the death benefit upon your death.

The method behind your question is worth reviewing.