Choosing A Life Insurance Company

Preserving Your Home for Future Generations

Life insurance can preserve your home for future generations. There are numerous mortgage-related policies, but not all are geared toward keeping your family in the family home. Learn more now.

Keeping Your Home in the Family

How Life Insurance Can Help Preserve Your Home for Future Generations

Your home is more than just walls and a roof. It's a place where a lifetime of memories is made. That's why you work so hard to manage the monthly mortgage payments and protect it with homeowner's insurance. But are you aware that your mortgage may also need protection?

If you're a two income family that depends on both paychecks to support your household (or if you are the primary wage earner) would your family be able to make the mortgage payments if one of your incomes were gone? As part of Life Insurance Awareness Month, we want you to know that there are many ways that life insurance could help protect your family from experiencing the financial stress of falling behind in payments, or worse, risk losing their home to foreclosure if you were to suddenly pass away.

Here's what you need to know about using life insurance to help preserve your family's home for future generations.

Level term life

A level term life insurance policy can be an affordable way to protect your home mortgage. Many insurers offer 20, 25, and even 30 year term policies, so it's easy to select a policy that coincides with the length of your mortgage term. For example, if you have a 15-year mortgage loan at $150,000, you might consider a 15-year term policy with a death benefit of $150,000. If you were to die, the death benefit is paid to your beneficiaries, who can use the money any way they like, including paying off the mortgage. And because the policy remains level for the entire term, your benefits won't decrease over time.

Permanent life

Permanent life insurance (such as whole life or universal life) is another good option for mortgage protection. Much like term insurance, you can buy a policy with a death benefit equal to your home loan (or any other amount), and when you die, the proceeds go to your beneficiaries to use any way they want. The main difference is that a permanent policy won't expire after a certain term, and the potential to build cash-value over time can be an added bonus.

Decreasing term life

When you buy a decreasing term life policy (sometimes referred to as mortgage life insurance), the death benefit is typically matched with the outstanding balance on your home loan. As you pay down your mortgage and the loan balance decreases, so does the life insurance benefit - although the premium remains the same. Once your mortgage is paid in full, the policy expires. If you were to die at any time during the life of your mortgage, the policy will pay out a benefit, but it's the lender - not your family - that's the beneficiary. This type of policy can provide protection during a time when you have substantial financial responsibilities.

Making the right choice

When considering mortgage insurance, don't confuse it with private mortgage insurance, or PMI, which is insurance that can be required by lenders if the down payment on your home doesn't meet a certain threshold (typically 20 percent). PMI has nothing to do with death or disability and is meant to pay off your lender if you were to default on your loan. The premiums are paid by you, the borrower, and it's a product that's purchased through your lender.

A home purchase means a great deal of financial responsibility. Don't risk your family losing it to foreclosure if you were to suddenly die. If you're undecided about what type of life insurance you should consider, speak with a qualified life insurance agent or company representative who can look at your individual needs and help you find the policy that's right for you - and the place that you call home.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.

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