A mortgage is a considerable financial responsibility, one which most likely hinges upon a steady income. In cases of sudden illness or death, the monthly payments may become difficult to meet. This is where life insurance can help.
Describes using a life policy as mortgage life insurance.
Recommends the absolute best policy for mortgage protection.
Suggests decreasing term life insurance as the least expensive option for protecting your home.
Premiums can vary by as much as 50% for the same coverage and options, so it pays to get quotes from as many reputable insurers as possible.
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A life insurance policy can protect your family from the financial obligations of making mortgage payments without your salary. In the event of your death, your family will still be accountable for mortgage payments, which may be unaffordable without your contribution.
To protect your family from bearing such a burden and possibly losing the house, most financial planners recommend purchasing a life insurance policy. Although there are other insurance options, such as mortgage protection insurance, the wisest and most economically sound choice, is to buy a life insurance policy.
The death benefit of your life insurance policy should include the amount of your mortgage. In the event of your death, the policy's proceeds will cover the entire cost of your mortgage, your house will be paid off, and your family will have one less thing to worry about.
If taking out a mortgage has already substantially cut into your finances, life insurance is even more important. Although your mortgage payments may make paying premiums for a whole life insurance policy unimaginable, there are cheaper options.
As an alternative to purchasing a permanent life insurance policy or mortgage protection insurance, explore the option of buying a term insurance policy for the same duration as your mortgage. This alternative is much less costly. The premiums will be considerably lower, but the coverage will remain the same.
At the end of the policy's life, you can then decide whether you want to renew or convert the policy or if you would rather discontinue the policy. This approach guarantees mortgage protection at the lowest cost.
The best choice, in terms of cost, is decreasing term life insurance. If the sole reason for purchasing a life insurance policy is for mortgage protection, investing in this type of term insurance is your best bet.
At the start of your mortgage, you owe the most to your lender and your mortgage protection should reflect that. However, since after a few years of making payments, you will owe significantly less, decreasing your protection is a logical move. A decreasing term life insurance policy allows this.
You can design your life insurance policy so that your protection is the same amount as your debt. Although the premiums do not decrease over time, your mortgage life insurance quote will be considerably lower than if the quote you would receive if the policy's coverage were level throughout its term. Some policies annual premiums are the same as the level coverage, but the payments end earlier than the end of the policy. For example, the premiums on a 20 year mortgage protection insurance policy are required to be paid for only 16 years even thought the coverage will last all 20 years.
To see how much a term life policy would cost you, get a fast free quote from one of our partner carriers, who will match your with the best term life policy available in your state.
If you'd like a little help with designing a decreasing term life policy, get in touch with an agent from one of our partner carriers, who can design a policy to fit your specific needs.