Whether it is a new home, an income property, or other real estate, you received a mortgage because the lender felt comfortable with your income level and reputable financial situation.  You are a good credit risk and the lender is fairly confident that it will receive its loan amount back plus interest.

What happens if you, as the primary income producer, pass away suddenly?  If you are depending on a couples dual income, what happens if one person and their income disappears?  Besides the emotional trauma, the survivor is faced with a significant drop in the household's level of income.  This is why many mortgage contracts include a clause that states, "At the death of any signer, the contract is subject to renegotiation..."  The loss of an income source can produce severe financial problems for your family that could lead to possible foreclosure.  That is why a number of banks and mortgage companies encourage homeowners to purchase mortgage life insurance.

Whose Insurance Makes Sense?

Basically, you purchase mortgage life insurance so, in the event of any untimely death, funds are available to meet any outstanding mortgage balance.  But who do you purchase the insurance from?  When you purchase insurance from a bank or mortgage company, you generally lose all ownership rights and control of the policy.  In some instances, the lending institution even pre-prints it's name on the beneficiary line of the policy.  You pay the premiums and if anything happens, the lender receives the proceeds.  There is no flexibility or other options for your family.  Of course, they receive the deed to the home, but maybe there could have been a better use of the money.  Sometimes it makes sense to have the option of receiving an income, maintaining liquidity, and making the payments on the home.  With the bank in control, that is not going to happen. 

Other points to consider instead of being forced to pay off the loan.  There are several reasons why a surviving spouse may not want to remain in the home:

• The daily reminder of your loss may be too difficult for your spouse and family to handle.
• The house may simply be too big to maintain.
• Your spouse may want to move closer to friends and family.
• Your spouse may need to relocate to a better job or school area.
• It may be better at this time not to pay off the mortgage and lose the tax deduction of the interest payments.  Your spouse may want to pay the mortgage to a point where he/she can comfortably handle the payments and keep the tax deduction of interest payments.
• The family probably does not need to have all it's equity tied up in the house.

Benefits of Personally Owned Insurance

Instead of insurance offered through a lending institution, you may want to consider purchasing personally owned life insurance.  Personally owned life insurance puts you in the driver's seat.  By purchasing insurance directly from an insurance company, not a bank or mortgage company, you own the policy and have full control over your options.  As owner, your spouse, not the lender, receives the insurance proceeds at death (assuming your spouse is beneficiary of the policy).  Your spouse can decide what course of action to take.  Meaning, he/she can use the proceeds to pay the mortgage in a lump-sum or continue paying it down periodically.

Personally owned life insurance is portable.  This means if you move in a few years, you won't have to replace your insurance.  This can save you a great deal of money since insurance rates usually increase as you get older.  You also have the option of keeping your insurance if you pay off the mortgage.  Instead have having nothing for your dollars a personally owned insurance can still provide a valuable benefit.  Even if you move to a new home, or simply refinance in order to get a better interest rate, it is possible to use the existing coverage as part of your new protection needs. 

Types of Coverage

Term Insurance

Personally owned term insurance may be an attractive mortgage protector because it lets you purchase large amounts of protection at a very competitive price.  It is designed to help people purchase the insurance they need at time when money is tight.  Term is also ideal when you only need coverage for a limited period of time. Term insurance gives you a guaranteed death benefit, and usually with no cash value.  Coverage is available for any length of mortgage, from a one year note to a thirty year mortgage.  Ask us about our Return of Premium term, which gives you all your premiums back at the end of the term.

Permanent Insurance

Whether it is whole life, universal life, or indexed life it offers a few differences to consider.  It has the guaranteed death benefit like the term, but it has the ability to build cash value for you to use.  Some people purchase permanent insurance instead of paying extra on their mortgage in order to pay off the mortgage early.  The policyholder  can use the cash build up in the contract to pay off the mortgage early and at the same time, provide the death benefit if premature death occurs.

Blended Combination

We can also design coverage which is a blend of permanent and term, giving you the protection you need at a price you can afford.  This gives you all the flexibility and all the advantages from both products.

Optional Coverage

Money Back- We have term plans that return all your premium back to you at the end of the insurance period.  So if you make it to the end of your mortgage and insurance contract 100% of your premiums are returned to you.

Payment Protection- Plans are available to provide not just the death benefit, but also a monthly income benefit in the event of disability.  That way, if you are disabled, your mortgage is paid while you recover.

Critical Illness- Plans can be designed that will pay off your home not only in death, but also for a catastrophic illness.  Lump sums are available upon diagnosis of cancer or heart attack or other life altering event.

Waiver of Premiums- If you are disabled the policy will pay itself.

Protect Yourself and Your Family

There is a real chance that someone other than yourself will be responsible for your family's finances.  Taking the necessary steps today can ensure your family's future.  There is no cost or obligation on your part to find out more.  We can provide you with more information and quotes from several different insurance carriers in order to suit your individual  needs.  It is easy to ontact us and just as easy to protect your family.  You can complete the contact us form on the tabs to the right, or you can call us toll free at (888) 946-7340 or our local phone (231) 946-5652.  Thanks.