Outstanding debts is one of the main reasons people buy life insurance, and for a homeowner, a mortgage can often be one of those outstanding debts. Your house is one of the biggest (if not the biggest) purchases you’ll ever make, so it’s important to think about how mortgage payments would be made and what would happen to your home if you or your spouse passed away. This article will help you understand the importance of life insurance for homeowners.
Why do homeowners need life insurance?
Life insurance is a form of financial protection for your family, helping them make outstanding mortgage payments and remain in their home if the homeowner were to pass away. If something happens to the primary earner in the home, your family may not be able to keep up with regular living expenses and mortgage payments. However, a life insurance policy serves as a safety net, allowing them to continue living life and paying for important expenses like the mortgage.
Term Life Insurance for Homeowners
Term life insurance policies are a straight-forward and affordable option for homeowners. Since the policy is only in place for a set number of years, you can select a term length that matches the length of your mortgage. Your term policy can cover the remaining mortgage payments, other outstanding debts and can also leave a death benefit behind for your loved ones.
How much is life insurance for homeowners?
The cost of life insurance depends on the type of policy, the amount of coverage and the length of the policy in addition to several personal factors that are taken into consideration during the underwriting process. You could use your life insurance policy to cover your mortgage balance, but you can also consider purchasing a longer term and larger coverage amount to cover some of your family’s future financial obligations. Our life insurance calculator can give you an idea of how much coverage you and your family needs.
Other Life Insurance Options: Mortgage Life Insurance
Mortgage life insurance is a specific type of life insurance that pays off your outstanding mortgage if you pass away. Mortgage protection life insurance is technically a type of term life insurance, having a set period of time, monthly premium payments, and if you were to pass away, having a death benefit that would be paid to the designated beneficiary.
Term life insurance covers all of your expenses up to the coverage limit (which can include your mortgage), while mortgage life insurance only covers the mortgage. It is also directly correlated to the balance of your mortgage, meaning as your mortgage decreases, so does your coverage amount.
The average cost of mortgage insurance is often more than the average cost of term life insurance. While there is no medical exam for mortgage life insurance, you can be considered more of a risk to take on than traditional coverage.
SelectQuote Can Help Homeowners Find Life Insurance
The process of purchasing a life insurance policy shouldn’t be as overwhelming as purchasing a home. At SelectQuote, we simplify the process, comparing coverage and rates from some of the most trusted life insurance carriers in the nation. We’ll take the time to understand your situation and what you need covered to match you to the right coverage and carrier for you and your family.