What is Veterans’ Mortgage Life Insurance?

What is Veterans’ Mortgage Life Insurance?

Ever wondered what would happen to your mortgage if you died suddenly? The thought of leaving your family behind can be stressful but what is antagonizing is leaving them with debt. Moreover, the situation might worsen when you are a disabled Veteran who has bought a house apt for your special needs.

In cases like these, getting a Veterans’ mortgage life insurance might be worth getting. A mortgage life insurance, especially the one designed for former military members, is a type of coverage that pays out a certain amount to the family upon the beneficiary’s death. This amount is used to consolidate mortgage debt and is either paid directly to the lender or the family in some cases.

An Overview Of Veterans’ Mortgage Life Insurance

Explicitly available to Veterans suffering from certain disabilities, VMLI is a coverage plan offered by the US Department of Veterans Affairs (VA). The insurance provides $200,000 coverage to the Veteran’s family members for covering mortgage debt in case the Veteran dies due to a covered peril.

However, unlike traditional life insurance, where the payout is provided directly to the family, VMLI is paid directly to the mortgage lender.

To qualify for the VA’s Veterans’ Mortgage Life Insurance, you would have to pass certain eligibility criteria defined by the department.

Qualifying For VMLI

To establish your eligibility for VMLI, you must meet the following conditions.

Note- All of the following conditions must be met.

  • You suffer from a severe disability that was either caused by your service or was made worse while serving your duty.
  • You are eligible and receive Specially Adapted Housing (SAH)Grants which help you build a house according to your special needs.
  • The title of your mortgage is in your name.
  • You are under 70 years old.
  • You have an ongoing mortgage of the home.

This VA benefit is available only for Veterans and active service members.

Don’t receive SAH? Here’s how to qualify

Specially Adapted Housing grants are monetary benefits provided by the VA to disable active and former service members. The grant allows eligible Veterans to help build/modify a home apt to their special needs. To qualify for this benefit, you must be suffering from a disability that was caused or made worse due to your service.

To qualify, the following conditions must be met-

The following conditions must be true-

  • You have the title of the home.
  • You suffer from a service-related disability that qualifies for this disability benefit.

In short, you must suffer from at least one of the following conditions to qualify for SAH-

  • Severe burns
  • Loss or loss of use of one or both limbs
  • Blindness in both eyes
  • Loss or loss of use of lower leg
  • Loss, loss of use or lower extremity in one or both lower legs that was caused after September 11, 2001, which has left you dependent on crutches, wheelchair etc.

Some Important Details

You must note that the benefit you receive as a claim for VMLI will be paid directly to your mortgage lender or the bank where you have an ongoing mortgage. Moreover, the coverage provided is $200,000. However, this does not mean that you will receive $200,000 in all cases.

To set things simply, your family will receive an amount that will be equal to the mortgage you still own but won’t exceed $200,000 in any case. In short, the maximum cap for the monetary benefit is $200k.

Another thing you might want to keep in mind is that VMLI is decreasing term insurance. This means that your coverage amount will subside as your mortgage balance decreases. Furthermore, the insurance does not have any cash value. So, you won’t get any dividends.

Applying For VMLI

Your application procedure would depend upon whether you have received SAH or not. If you haven’t applied for the housing grant, you must prove your eligibility and apply for that first.

After receiving your SAH, you can fill out the VA Form 29-8636 to apply for VMLI and send it to your regional VA office.

The Takeaway

Getting VMLI can surely help your family consolidate the mortgage debt after you’re gone. The premium you have to pay would depend upon a number of factors like your age, amount of coverage you need, mortgage balance and the number of mortgage payments you have already paid.

Moreover, in case you are planning to sell your house, transfer your mortgage to someone else, refinance your home or liquidate your mortgage, you must inform the VA.

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