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If you die, will the bank be willing to do business with your spouse? Will he or she have to move? Will the bank foreclose on your home? These are things you need to consider when purchasing a new home.
The fact of the matter is, you should consider purchasing life insurance to protect your mortgage. Here’s why…
How This Applies To Cars
I first heard of life insurance to protect a loan when I purchased my first car, a Saturn. The dealership offered me the option of buying additional insurance that would pay off the car should something happen to me. In the end, the car would be left to my husband.
I had never heard of such a thing, but the idea of me dying — and having the car that my husband and I were sharing also taken away — made me consider buying the insurance. Since I also had a co-signer and the cost was minimal, I did it.
A Tip Before You Buy The Insurance
What I did not understand at the time is that it is better to purchase this insurance on your own, rather than from the bank that is issuing the loan.
If you purchase the insurance policy from a life insurance company instead of the lender, your beneficiary has more control over the money — meaning that they can opt to sell the house and use the money to purchase a smaller house, or find other ways to make the most of the insurance policy.
To find out more about using life insurance as Mortgage Protection, check out the National Educational Association website.
I have been a certified tightwad striving for financial freedom since I became pregnant with my first child — and I decided to find a way to stay home with him full-time. I enjoy sharing my personal experiences in my journey back to financial health and planning for a future — which will include sending 2 kids to college and early retirement.