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House and Life Insurance

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You recently purchased the house of your dreams, and a financial institution has made the loan for the mortgage because it considered that your earnings and your financial state are satisfactory. But the question is: how would your family keep paying the mortgage if you, the main income provider, or even the provider of half the income, died? In addition to the emotional shock that your family would face, there could be a significant drop of family income. This is why many banks and mortgage companies encourage to owners to purchase life insurance for protection of the mortgage.

What type of insurance is the appropriate one, you ask? Basically, mortgage insurance is a life insurance policy purchased to make sure that in case of sudden death, there are available funds to liquidate any pending balance in the mortgage. In addition, you may be wondering to what company you should purchase a life insurance policy. When you buy insurance from a bank or from a mortgage company, you generally stop being the owner of the policy. Sometimes, mortgage companies print their names automatically as beneficiaries of the policy. You pay the premiums and, in case of sudden death, the moneylender receives the benefits. Your family, then, receives the house deed.

At first glance, this may seem like a reasonable solution, but there are several reasons why it cannot be the best one: the daily memories of your absence and your loss make it very difficult for your family to stay in your house, the house may be simply too big to maintain, your spouse may want to move near friends or family, or your spouse may need to move to a better job or school.

In this case purchasing an insurance of your own is a good choice. That way, you have control over the policy, and as the owner, your spouse (supposing your spouse is the beneficiary of the policy, and not the moneylender institution) receives the benefits of the policy in case you would pass away. Your spouse may decide what decision to take whether it is to liquidate the mortgage completely or pay it periodically.

Buying mortgage insurance through a bank or purchasing life insurance, the key is to be protected. Taking today the necessary measures can help ensure the upcoming economic safety of your family.

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