The decision to get life insurance is often influenced by a major life milestone. When you get married or become a parent, you gain a new dependent who may rely on you. Life insurance also comes into play when you take on a large financial obligation like buying a home.
Life insurance for mortgage protection is a reliable way to establish financial stability and secure a home for your family. Life insurance helps ensure that the financial debt you owe toward your home can be paid if something happens to you.
Your home is more than a roof over your head. It’s a place where your family will grow and your life will evolve. It makes sense to have a policy in place ensuring that your family will be able to keep their home no matter what lies ahead. A New York Life financial professional can help you select the life insurance coverage that will best fit your needs.
There are times when you may need to combine insurance policies in order to meet your specific needs, such as paying off a mortgage.
A life insurance for mortgage protection policy is a term life policy designed specifically to repay mortgage debts and associated costs in the event of the death of the borrower. These policies differ from traditional life insurance policies because they are specifically pegged to the mortgage. These policies are also distinct from the mortgage insurance that lenders often insist that you take out. That insurance pays off the amount owed to the lender only; should something happen to you, the money will go directly to the lender. Its premiums are usually part of your monthly mortgage payments. And lenders will allow you to cancel such coverage when you have a certain amount of equity in the house and they know they will be able to recoup the remainder of their loan through a sale.
Whole life insurance and term life insurance can all provide a means of paying off your mortgage. With each type of insurance, you pay regular premiums to keep the coverage in force.
Life insurance can be used to help your dependents pay off your mortgage if you die. This type of strategy involves a life insurance often sold as a decreasing-term policy, so your payout reduces as you gradually pay off your mortgage. A life insurance claim is typically paid out as a lump sum.
If upon your passing no one has been designated to inherit the loan and no one makes mortgage payments, the lender will still need to collect the debt. The lender usually ends up selling the home to recoup the debt. If someone intends to keep the home, they must continue to make mortgage payments.
There are no legal limits as to how many life insurance policies you can own. Many people have life insurance coverage through their employer in addition to their own term life policy or permanent life insurance policy. However, each policy needs to be underwritten and may impose a limit.
Learn how mortgage protection can protect more than just your home.
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