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Billy Hope, MBA

It could protect a significant financial risk.

Everybody who has ever owned a home remembers their first.  Buying your first home is almost an anointing of our inevitable adulthood.  Most times, it is the biggest purchase we have made to date.  You sign what feels like a billion pages, then get to the question about mortgage insurance.  Is it right for you?

If you purchase the home with your partner there is a good chance the mortgage payment is being split.  Imagine you were to pass away and leave the full burden of the mortgage payment on your surviving partner.  Would they be able to make the payment comfortably?  If kids are involved, how important is it to keep them in their home?

That’s why life insurance can play a key role in protecting your house.  Be sure to understand your options.

When you purchase a home you will get plenty of offers in the mail about mortgage insurance, but what is it?  Mortgage insurance, most times, will require you to pay a level premium each month, but the death benefit will decline as you pay your loan down.  If your insurance payment is $25 a month when you owe $250,000 on a home, why continue to pay $25 a month when you only have $100,000 left on the mortgage years later?  If you sell your home the coverage will be terminated due to you not owning the property that is covered.

When the time comes to purchase your home, consider term life insurance.  Term life insurance offers a cheap way to cover the biggest asset you own.  Term life insurance is an agreement between you and an insurance company for a set number of years (typically 10-30 years).  If you continue to pay your premiums the insurance company will pay out the agreed upon death benefit if you pass away during the term.

If you sell your home prior to the end of your term insurance, you can revisit your financial situation and see if it makes sense to keep your current coverage intact to protect other assets.

Life insurance is an integral part of financial planning.  Next time you purchase a home, be sure to educate yourself on the proper protection.