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.
About the author:
John Winters writes about a variety of financial topics. He
recommends www.protected.co.uk for more life insurance
information.
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