Do you know that the average mortgage is around $171,000? Do you know what would happen to your family if something were to happen to you and they didn't have a way to pay for it? That's where life insurance comes in. Life insurance can help protect your family from financial burdens when a tragedy strikes. But how does mortgage life insurance work? What types of policies would best suit you, and are they really worth the money?
Mortgage life insurance provides peace of mind for homeowners by ensuring that the family home isn't at risk should anything happen to either the homeowner or their spouse. The benefit has a home loan permanently repaid without stressing about debts in these difficult times.
Mortgage life insurance typically refers to a decreasing term life policy. Unlike ordinary life insurance, mortgage insurance does not provide a fixed payout. You may start off with $200,000, but that value will decrease as your mortgage is paid down.
Another thing you should be aware of is that when you die, the payout goes to the mortgage lender. Yes, your family benefits by having a mortgage-debt-free home, but it won't leave them any cash they can use for other outstanding debts and living expenses.
So if you're thinking about the benefit of having mortgage protection ask yourself, do you really want to pay for insurance that leaves you no control over where the money goes? If that does not sound too appealing, there are other options that you can choose from.
Other mortgage life insurance policies can ensure you that your beneficiary (your family/spouse) has funds to pay off the mortgage and other expenses that they might have.
This policy is offered on a 25 or 30-year term that allows you to cover the amount and length of your mortgage.
This life insurance policy allows the full death benefit to be passed directly to the surviving spouse, giving them the ability to pay off the mortgage in addition to other necessary expenses.
Permanent life insurance policies don't come with a set expiration date. These permanent policies are designed to last the length of your life, provided you keep making the required premiums on time. Permanent life insurance also includes a feature called "cash value." This is money in the policy that can be withdrawn or borrowed against. It's important to note that loans pulled against an insurance policy add interest and reduce the death benefit and cash value by the outstanding loan and interest. There are three different variations of permanent life insurance, including Whole, Universal, and Variable life insurance.
If you've been considering purchasing a home and feel like you need to be protected by life insurance, we can help. Whether it's mortgage life insurance or any other type of policy, our team will be glad to answer all your questions about what policies would work best for you. Interested in more information? Give us a call today!