Why Mortgage Life Insurance Is Not Ideal
Life insurance is something that absolutely everyone should have - but many people fail to realize this or think that they are too young. Are you just starting out after college? Or perhaps you’re about to get married or become a parent for the first time. Or, perhaps you’re about to purchase your first home. Those are momentous occasions - or pivotal moments - in life, and having the right life insurance coverage is crucial to securing the safety of those moments in the future. So, when you’re facing one of Life’s Pivotal Moments, it’s important to make sure that you have the right life insurance for your unique situation.
For example, acquiring a large asset such as a home means that you should take a moment to re-evaluate your life insurance policy. Of course, you’re probably incredibly proud of purchasing your first home, but being properly insured goes beyond that. After all, it’s not just a house; it’s a home. And more than that - it’s your home. Your home is the place where you’ll likely raise a family, and it isn’t something you’d want your family at risk of losing if the unthinkable were to happen and you were to pass away.
It should be said - death is difficult to discuss and plan for, if only because it’s tough to think about a time when you can’t be there for your family. But, finding the right life insurance plan can help. If the unthinkable were to happen, dealing with death would be even more difficult for your family if they aren’t covered financially. It’s crucial that your family is covered through your life insurance policy so that their current lifestyle can be maintained even after your passing. This means that you should plan for enough life insurance to cover house payments, insurance, and even everyday living expenses.
What type of life insurance is right for you if you’re purchasing your first home? After you purchase a new home, you are often presented with mortgage life insurance. This type of insurance is sold by a bank or mortgage company and usually sounds like a great deal, because they’ll pay off your home in the event of your death. But, if it sounds too good to be true, that’s because it is. Unfortunately, the biggest benefactor of these types of policies is the mortgage company itself. Think about it this way - once you purchase your home, you are constantly paying down your mortgage. So, the mortgage life insurance policy actually covers a lesser monetary amount as time goes on.
Instead, consider term life insurance. In a term life insurance policy, your chosen benefactors are allowed to make financial decisions regarding where the money is best used in the event of your passing. For example, there may be a more pressing financial issue than the home mortgage, such as medical bills or funeral expenses. Mortgage life insurance wouldn't cover these types of expenses.
It’s important to work with a life insurance company who understands your needs and your hopes for the future. A great thing about life insurance is that it gives your family the ability to make decisions that will best serve their future.
About the author: Michele Cleary has been in the business for over 35 years and holds a CLTC designation. She believes that life insurance can give you and your family peace of mind, especially when you have other things to worry about. Michele now has 4 grown children and knows that proper planning is essential. You can reach her at 1-800-651-1953 or MCleary@Pivot.com.