If you own a home, chances are you are paying on a mortgage. If you live in a state where home prices are high (like California, as I do), your mortgage payments are probably higher than you’d like. If that’s the case, and you are the breadwinner of the family, it would be a good idea to purchase a life insurance policy to, at the least, cover the mortgage. If you were to pass away, you wouldn’t want your family to lose the home you worked so hard to acquire.
Until a few years ago, many people purchased mortgage insurance, which is usually a reducing term policy, which means the amount of coverage decreases with your mortgage over the length of the mortgage (typically 30 years). As regular level term life insurance premiums became less expensive than decreasing term insurance, the traditional mortgage life insurance fell out of favor.
Most of our clients today purchase a term life insurance policy with a death benefit large enough to pay off the mortgage and other debts, as well as providing income replacement for the insured person, should he/she pass away. Paying off the mortgage is a good start, but other potential costs should be included in the death benefit, such as college expenses for any young children in the household and living expenses for the family for a significant period of time.
When evaluating how much life insurance to purchase, a good rule of thumb is to get 15- 20 times the insured person’s income. Once you have that figure, subtract all the debts, including the mortgage. This is what the family will have left to live on once all the bills are paid. You can then determine if that is the right amount and, if not, add or subtract from that number.
If you would like to see life insurance quotes for various amounts, click here to get started.
Deciding which type of life insurance product is right for you can be difficult; regardless of whether you’re considering retaining your current policy or you’re shopping for new coverage, it’s important to note that there are benefits to both term life insurance and whole life insurance. Which is the best … Continue reading Term Life Insurance vs. Whole Life InsuranceRead More
We all know how a good life insurance policy can positively affect your family—providing stability, financial security, peace of mind, etc. But have you ever considered how this relationship works in reverse? It’s true, while life insurance does wonders for your family, your family might have some not-so-desirable effects on … Continue reading How Family History Affects Your Life Insurance RatesRead More
Let’s face it, when people think of life insurance, they usually don’t think of adrenaline pumping, heart-pounding, high-speed excitement. Well, that’s all about to change with the announcement that groundbreaking—and record breaking—racecar driver Danica Patrick will become the new national spokesperson for Life Insurance Awareness Month this coming September. … Continue reading Danica Patrick Becomes Spokesperson for National Life Insurance Awareness MonthRead More