Congratulations! Buying a house is a long, exciting, often complicated process, but at the end of it, you have a beautiful new home for your family to enjoy for years to come. It’s also probably the biggest financial investment you will ever make in your life. Your new purchase most likely comes with a mortgage that will need to be paid over the course of the next few decades. You may need essential financial protection to protect your family and home if something should happen to you before that mortgage is paid off.
Why is life insurance important when you own a home?
Take stock of your finances after your new real estate purchase. Could your spouse afford to make the mortgage payments without your income in the event of your untimely death? Life insurance can help cover the mortgage so your family doesn’t have to lose both you and the house. You could purchase a term life insurance policy that is timed to match the duration of the mortgage. For example, if you have 20 years left on your mortgage, you would want to purchase a 20-year term life insurance policy. You would also want to make sure you choose a coverage amount that could pay off the mortgage amount and also take care of other financial obligations, debts, and income replacement.
What type of life insurance should I get?
This is a great way to protect your family for a specific amount of time. This type of insurance pays a guaranteed benefit in the event of the insured’s death during a specified term. Typical term lengths could be 10, 20, or 30 years. It comes with an end date, but it is also the more affordable option and the easiest to understand. You might purchase term life insurance to help supplement your income until retirement, until your kids are grown, or to make sure the mortgage gets paid in full.
Learn about Term Life Insurance
This lasts you for the rest of your life, unlike term insurance. While it can be more expensive, it has several attractive advantages. This type of insurance comes with fixed premiums, meaning your monthly payment is locked in and will not increase as you age. Your policy will also build cash value over time that you can borrow against tax-free to help you fund your retirement, for instance, or your child’s college fund. Consumers appreciate the benefit of forced savings, as well. And as long as you’re paying the premium, you’re covered if you die tomorrow or you live to be a hundred and twenty.
Learn about Permanent Life Insurance
This is often considered to be the best of both worlds. This type of life insurance gives you the opportunity to have life insurance coverage and also save money for the future. It builds cash value over time much like permanent life insurance does, and you can take out a policy loan if needed. The premiums are flexible, meaning you can change the existing policy to make it more affordable while keeping it in force and continuing to build cash value. And as long as you’re paying the premium, you’re covered for the remainder of your life.
Learn about Universal Life Insurance
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