We need coverage on our homes, rentals, automobiles, and even our lives and children’s lives. You may ask what good this is while pointing out how much you do not use your automobile coverage or how much you pay in. The fact is if you get into an accident, you will be glad you have it. You may still be muttering. You will be glad you have it when the person you have gotten into an accident with comes to collect damages. The company will pay out for their repairs and injuries, so you can focus on healing. If you chose to get only liability coverage, you may still be on the hook for your own damage, but you will be glad you avoided the legal trouble in most states and writing a hefty check for the other person. The same goes for life insurance .
If your husband or wife were to pass away, the last thing you will want to deal with is money. Yet, funerals cost money. A little foresight will allow you to grieve without the stress of money, taking days off work and planning a funeral. You and your spouse should consider your options before tragedy strikes your home. There are many types of coverage, and depending on what you are looking for, you may want to do a little research. The most promoted policies are term and whole life. They carry different benefits. A whole life policy costs a little more but allows you to build savings. The company will offer a higher percentage rate than a typical saving plan. Another benefit is that you can often borrow against it. You can withdraw the money for a new roof and pay yourselves back. No questions asked, just call and ask for a check.
A term policy is going to cost less. The benefit is that your family can be fully insured for less money a month. You will want to talk with your agent to discuss how much coverage you need. Your agent will discuss other scenarios with you. For instance, what would happen if you were to both pass away and leave your children orphans? They will discuss how much coverage you would want for that. They will inform you on the types of life insurance policies they offer that would protect your family.
Coupled with drawing up a will, life insurance can be a gift you give your family. Like auto insurance, you will wish you never have to use it. If something happens and you need it, you will be glad you took the time to make this important purchase. Take advantage of this to discuss other plans to care for your family in tragedy. Be sure both spouses know where the bills are, all account numbers and any policy numbers. Do anything you can to make a terrible time easier. You will never regret taking the time.
The majority of insurance firms will offer mortgage life insurance but what exactly is this ‘Mortage Life Insurance’ and what benefits does it provide to the prospective purchaser? How much does it cost and whom can obtain it?
Mortgage Life Insurance is designed to protect your outstanding mortgage debt in the event that you prematurely die. This is a valuable form of protection for your surviving dependants at a time when financial problems are at their most delicate. The most common type of mortgage protection policies is twofold;
Decreasing Mortgage Term Assurance
The benefit provided with this type of mortgage protection decreases inline with your outstanding mortgage loan. It is primarily designed to cater for a repayment mortgage given your monthly payments are made up of interest payments to the lender and a portion which goes towards reducing the actual loan amount. As you start to pay some of your loan balance over the ensuing years the amount owed also. Therefore, reduces and mortgage term insurance sum assured (the lump sum benefit) reduces inline with this.
This is one of the cheapest forms of mortgage life insurance given the payment which the lender may have to pay should you die before the end of the term is reducing and thus exposing them to a reducing risk.
Level Term Life Insurance
This type of mortgage life insurance also provides a lump sum benefit although with this cover the amount payable over the term of the policy (if you should die within this term) remains constant and does not reduce. This cover is also suitable for mortgage loan protection in relation to a decreasing loan balance (repayment mortgage) given the outstanding balance reduces but the cover remains the same providing your dependents with additional funds above and beyond your mortgage balance.
Clearly, this type of cover is a little more expensive that the decreasing term insurance for the reasons noted above and the consistent risk faced by the respective insurer. However, in most circumstances the difference in monthly premiums is as little as a few pounds more expensive.
Insurance companies offering mortgage life insurance vary to some degree but for the most part all firms will offer both these types of protection albeit sometimes with additional ‘add ons’ such as continuing your premium if you are unable to work due to illness or injury amongst others.
Both forms of cover provide an outstanding benefit to purchasers and can alleviate financial hardship in the event of an untimely death and should not be underestimated.