The Right Choice
An early death can have a devastating effect on a family and their financial situation. Without prior planning, the surviving spouse or heirs may not be able to keep up the mortgage payments. When that happens, the only way to salvage the house’s equity is to sell the property before the bank forecloses. With that said, all homeowners should research Mortgage Insurance instruments to avoid hardships caused by job loss and death.
Banks sell mortgages and along with the loan, they also sell or can arrange for Insurance on the loan. The bank will be the beneficiary of the insurance and the insurance is not portable. What this means is that if the home loan is refinanced at a lower rate at a different bank or institution, a new Insurance Policy for the mortgage may need to be obtained. The new Insurance policy could be more expensive based on the insurer’s age. In view of this, when refinancing it is wise to address purchasing insurance for the Mortgages.
Whole Life Insurance
Another method to safeguard your mortgage is to take out a Life Insurance Policy for the amount owed or even higher. Upon the death of the insured, the beneficiary would receive a lump sum, tax-free, payment that would cover the existing loan. There are many variables to purchasing a life insurance policy and we highly recommend conducting research and consulting with experts to ensure that this type of instrument meets the requirements of the insured.
Term Life Insurance
Term Life Insurance is probably the most purchased form of insurance and it too can protect a mortgage. It is similar to Mortgage Insurance in that it is for a specific time period. While Mortgage Insurance is specifically for protecting the loan amount, Term Life Insurance can be used for other needs as well upon the insurer’s death.
Upon the insurer’s death, a Term Life Insurance policy will pay the beneficiary or beneficiaries a tax-free lump sum. Those funds could pay-off the home loan, other loans, college tuition and more.
Term Life Insurance in many cases is less expensive and more flexible than other types of insurance. The coverage stays the same and when thorough planning is incorporated, this insurance can cover other needs besides a mortgage. Term Life Insurance in many cases can be converted to a Whole Life Insurance Policy to meet changing financial needs.
We urge the readers of this information to give us a call so that our experts can help and guide you to make the correct decisions. There is no fee and no obligation. Don’t you want the rest of the story? Don’t you want all of the facts?