When it comes to having the proper life insurance, your needs may require more than just covering funeral expenses. If your family still has debts to pay, then expanding the coverage of your life insurance policy may be necessary. Many people in fact use life insurance to cover mortgage expenses that are remaining.
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If you are the breadwinner of your family, then leaving them behind with a large mortgage yet to pay off may be too much of a financial burden. Naturally, before you decide to purchase life insurance to cover your mortgage, you’ll want to look over all of your options first and check out whatever additional coverage that you might possess.
Do I Need Term Life Insurance to Protect My Mortgage?
In fact, you may need term life insurance mortgage protection depending on your circumstances. For some, such protection may not be necessary because they have other means to cover all the payments. However, it must be noted that term life insurance in particular is one of the best and least expensive means to ensure that your mortgage is paid off in case the worst should happen to you.
There are mortgage insurance policies which are available, but they have certain limitations that may not suit your needs as a family. First, mortgage protection insurance benefits will go straight to the lender and not your family. This means as you pay off your mortgage, you will have an additional amount on your term life insurance that can be used to pay off additional debts or as a legacy for your family.
Plus, mortgage insurance decreases in value as you get closer to paying off your loan. Many mortgage insurance owners often pay the same amount over the term of the policy for a reduced value. Term life insurance is never reduced so you will get maximum value.
How to Use Life Insurance to Cover Mortgage Loan?
You can use life insurance to cover mortgage only, but term life is so inexpensive that you can designate it for other uses as well. However, the most important part is that the beneficiary gets to decide where all the funds will go to meet the needs of your family. Life insurance for mortgage cover is arguably the best way to ensure that your family is protected because the benefits will go to your spouse or the person you designate as the beneficiary.
Plus, even if you buy term life insurance to cover mortgage payments, the amount that is owed on your home becomes less and less with each payment. After a few years, there will be a considerable amount on your life insurance policy that may cover your funeral expenses and any additional debts such as car loans and the like.
Leaving behind a large benefit that takes care of the mortgage and other debts will not ease the grief that your family feels from your passing, but it will provide a little peace of mind as the finances are their financial obligations are covered during this trying time.