You’ve finally saved enough for the down payment on that perfect home in that perfect neighborhood. Your closing went off without a hitch and you begin the transition from that home you were renting to the home you are buying. You think to yourself how wonderful it is not to be throwing rent money down the drain, and that you are finally purchasing your most valuable asset. You get a call from your homeowner’s insurance agent who offers congratulations on buying the home and welcomes you to the world of the thirty-year debt.
At bedtime, you begin to wonder a little bit about the downside. What happens if you die unexpectedly and your wife, who is staying home to raise your two young children, cannot pay the mortgage. You then find it a little difficult to sleep because you are worrying about “What if”.
The easiest and most affordable way to protect your family from losing your home if you die is by purchasing Mortgage Protection Insurance. This plan consists of using a life insurance policy for the amount of the mortgage that can be used to pay off the mortgage if you die unexpectedly. The easiest and most affordable way to accomplish this is by using Term insurance. If you are like most home buyers, you’ve taken out a thirty-year mortgage so the Term policy, you need to purchase should be for three years as well.
Options to Consider
While reviewing your options, it’s best to consider all the riders that are available in today’s Term insurance policies:
o Return of Premium Rider – With this rider, the insurance company
will return all of the premium paid into the policy over the policy
term. This means that if you outlive your policy, you will have paid for
only the rider premium since the insurance premium will be refunded to
you. This rider makes very good sense for a younger homeowner in good
health since the rider’s premium is very affordable.
o Additional Insured Rider – This rider allows you to add your spouse to the policy which makes very good sense if you are both breadwinners for the family.
o Child Term Rider – Allows you to insure all of your children you have now and will have in the future for one low additional premium. This rider can be a huge bargain in terms of cost of insurance.
o Waiver of Premium – With the Waiver of Premium Rider, your insurance company will pay the monthly premiums on the policy if you become terminally ill or disabled.
When you consider the cost of Term insurance compared to Universal Life or Whole Life, it is a more affordable way to make certain the mortgage is taken care of in the event of your death and, other life insurance policies that you may have already, will not be affected, which leaves more money for your spouse and children.