If someone asks, “Why do you want to buy a house?”, each of us will have different reasons.
Some would say that a house is an investment. Others think of it as a life goal that needs to be unlocked. To the wealthy few, a house is a status symbol. To many, it is a necessity. But many of us will agree that a house may be the biggest asset our children can inherit from us.
Some people will buy a property, live there for a few years, then sell it off. However, there are more individuals who see their homes as a place they’d want to live in for the rest of their lives. It is where they want to raise their offsprings and build a family. And if their children wish to, it can also be where they can begin building lives of their own after you’re gone.
If your house means this much, you should do your best to protect it not just for you but for your family.
Buying a Home with a Mortgage
Most of us purchase a property by taking a mortgage loan. Unless you have loads of money kept in the bank and you can afford to buy the home outright, a mortgage is the next best option.
If you take a mortgage, you need to pay it off before you can actually have full ownership of the property. Failure to do so may mean that you risk losing your house to a lender.Look for a way to finance a home purchase? click here.
Because your home is purchased through a loan, the property itself works as a collateral. A lender or a bank can chase after your property and repossess it to minimize their losses.
What if you pass away even before you finish repaying the mortgage? What can happen? Your family may continue making payments to keep the house. They can sell it, pay off the remaining mortgage balance and move to another place. There’s also the possibility that the lender can take the property away if they can’t keep up with the payments.
This is when a mortgage life insurance becomes important.
What’s a Mortgage Life Insurance?
It’s a life insurance policy specially designed so that your family can benefit from it in the future. The coverage secures the home for your family once you pass away.
When you die, your mortgage life insurance will pay either your mortgage lender or your chosen beneficiary a sum of money which will be sufficient to repay any remaining mortgage balance.
How does it work?
The insurance coverage is calculated based on the outstanding mortgage balance at the time the insurance policy takes effect. The insurance coverage will then gradually decrease as the remaining mortgage balance decreases, given that you continue paying your mortgage dues diligently. Moreover, the insurance policy’s termination date will be the same as the scheduled date that you will completely repay the mortgage.
Some policies also pay out if the policyholder becomes terminally ill. The insured homeowner who is medically diagnosed with a terminal illness with a life expectancy of fewer than 12 months may receive funds from a mortgage life insurance. Again, these funds should take care of the remaining mortgage balance and may not be used for other expenses.
A mortgage life insurance is a great way to protect yourself and your family from an unexpected and unfortunate event that may result in them losing ownership of the home. Before you purchase a mortgage life insurance policy, make sure that you’ve carefully scrutinized the plan’s coverage, costs, and terms.
You can learn more about this plan and other ways to protect your assets by talking to trusted insurance providers. Plan your future today!