BLOG

Discussing the need for life insurance is never a pleasant topic, and certainly combined with talk of mortgage payments, it can be downright distasteful.  But it is your responsibility as the principle breadwinner in your home to consider what might happen if you or your spouse were to perish.  Would your spouse be able to meet the most basic needs of food and shelter?  While the money necessary to pay for basic amenities like food and transportation are attainable through a single income source, most families simply cannot afford to meet their most basic requirement, the mortgage payment, without the income from both spouses.

How it Works
If you are in this situation, it is important to take the necessary precautions in case you or your spouse dies unexpectedly.  While saving enough to cover your mortgage is certainly an ideal solution, it is largely unfeasible for most contemporary families.  As a result, individuals often opt for mortgage protection life insurance policies.  These policies are designed specifically to meet the needs of your home mortgage payment in the event that you or your spouse dies.  

The idea behind mortgage protection life insurance is simple: you pay a monthly premium in exchange for which the insurance company agrees to pay off the rest of your mortgage should you die.  

Pricing
Pricing for mortgage protection life insurance policies parallels that of traditional life insurance price criteria.  For example, if you smoke your rates will be higher, just as if you are an older individual.  But certainly the most determinative factor in your price will be the amount of coverage you need.  The more you owe on your home, the more insurance you will need to pay it off, which of course means the more expensive the insurance premium will be.

Alternatives to Consider
While mortgage protection life insurance will cover your mortgage payment, as all home owners know, this is only part of the cost of owning a home.  In addition there are taxes and repairs to prepare for.  For a family that has lost a breadwinner, making these types of allocations can be difficult.  As a result, many individuals opt for coverage which goes beyond just mortgage protection and instead provides payments sufficient to cover all the expenses associated with owning a home.  This type of insurance often comes in the form of a term life policy which is for an amount which exceeds the price of your home.  Of course, this extra coverage comes with a price.  But with this coverage also comes quite a bit more flexibility.  Under a term life policy your family is not bound to pay off the house with the money they receive, but can instead use it in whatever manner they feel most compelled to.  This can be especially helpful if there are other medical costs to consider or if you have children approaching college age.  

Life insurance is not a pleasant concept to consider because it requires that we think about the potential for our own demise and the resulting consequences of our death.  It is vital, however, that as individuals who are responsible for the financial support of others, we consider these difficult questions and decide whether a life insurance policy is the best solution for us.