When it comes to protecting your mortgage, we are most familiar with mortgage insurance. While mortgage insurance may seem like the default choice, life insurance offers a level of protection for you and
your family that traditional mortgage insurance cannot do.
Mortgage insurance is a type of insurance that protects against default on home loans. It's mandatory when you buy a home because the bank is protecting itself. But, who is protecting you?
Life insurance for Mortgage Protection
Life Insurance: Life insurance offers a more comprehensive and flexible approach to protecting your mortgage. Here's how it differs from mortgage insurance:
a. Coverage Amount Flexibility: With life insurance, you have control over the coverage amount, allowing you to choose an amount that not only covers your mortgage but also provides additional financial protection for your family's needs, such as income replacement, education expenses, and debt repayment.
b. Lifelong Protection: You can get a
like an IUL or whole life policy to protect you for the rest of your life as well as a term policy that lasts as long as the mortgage and is the same coverage amount as the mortgage debt. This way if the primary person paying the mortgage passes away, the life insurance will be able to pay off the remainder of the mortgage.
c. Living Benefits: Unlike mortgage insurance, life insurance can pay you in case of illness or disability. Let's say, the primary mortgage owner becomes ill or disabled and can't continue working. He or she can file a claim and if he or she qualifies, will be able to draw money from their death benefit to use to pay their bills.
d. Beneficiary's Choice: With life insurance, you have the freedom to choose the beneficiaries who will receive the death benefit, enabling you to provide financial security for your loved ones beyond just the mortgage repayment.
The best thing to do is speak to a licensed life insurance agent to determine what product will fit your needs. There's term life insurance, whole life insurance, indexed universal life insurance. You can actually solve for retirement need with indexed annuities.
Your budget and needs will come to play when determining the best product for you.
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