This is a guest post written by Denise Mancini from Accuquote.com. I normally get offers for guest writers who have something to promote and they offer to write a free article in exchange for links to their websites. They do this because more links from more websites make them rank higher in Google searches. Normally I turn them down because they are irrelevant or poorly written. However, this post has some good main points so I decided to run it. Over to Denise.
One of the largest purchases in your lifetime will most likely be your home. If you have bought one or are planning to, chances are that you have looked into a mortgage in order to afford one. As time passes, and you pay your monthly mortgage payments, have you ever given any thought to what might happen to your family or for that matter to your home itself if you die suddenly? Would your spouse or children have to give up their home and loose a precious asset in the bargain? A sound financial plan would considerably help matters in such instances. And part of such a plan would have to be a comprehensive term life insurance policy.
Term Life Insurance is the ideal vehicle for protecting your family and your home. This type of insurance can offer stability in terms of your finances when you most need it. If you have a term life insurance policy and you die, the death benefits of the policy can be used in a number of ways. For example, they can offset the cost of the funeral, they can be used to pay off any remaining debts, they can act as a source of income for your family in your absence and they can also pay off your mortgage. If you die within the term of the policy, you can be assured that your entire mortgage will be paid off. Such security would obviously depend on the length of the term and the amount of coverage taken. For example, if your mortgage were a 30-year one, it would be wise to choose a 30-year term life policy as well.
That said, term life insurance also covers more than only your mortgage. When you choose the amount of coverage, you need to calculate all your other debts (auto loans, personal loans, credit cards) that will be left to your family to pay off in your absence. Life insurance can protect your assets and pay off any pending debts. Your family might otherwise find it impossible to clear your medical bills, car loans and credit card debts. In this way, life insurance can leave your other assets for your family to use. By providing much needed liquidity to your estate, life insurance prevents cashing in and selling off your other investments to make ends meet. The benefits of a policy are made available immediately after a death, thus averting a financial crunch.
When you purchase your mortgage, you might be offered a mortgage life insurance as well. However, before signing up for one, do weigh the pros and cons versus a normal term life insurance policy and you may end up saving a lot of money. For example, with mortgage life insurance, the amount of coverage is determined by the amount of mortgage owed. Unlike a term life policy where you can decide how much coverage you need. Once your mortgage is paid, the mortgage insurance is not applicable whereas a term life policy can be kept in effect for as long as you require. And finally, with a term life insurance policy, you determine who your beneficiaries are but with a mortgage life insurance, the lender is automatically the beneficiary. With the right investigations and questions, you will soon realize that a term life policy will have lower premiums and offer more flexibility and coverage than a mortgage life insurance policy.