Having enough life insurance to not only cover the loss of income, but also your family’s other debts (such as house, car, credit cards, etc.) is a wise move. Even though it may feel like a struggle at the time if you have to scrape the funds together to cover the premium.
Should anything happen to you, your family would be protected by having mortgage paid off. Having the house paid off would secure your family’s finances. Or, if you have insurance that is triggered by a disability or being unable to work, then you and your family are covered if something should happen to the finances.
Mortgage insurance actually is such a good idea that many mortgage companies, in fact many insist on it. That is wise on the part of the mortgage company because it provides them with additional security, and makes it easier for them to justify loaning you the money for your mortgage. From a business standpoint it really just makes sense both for you and for them. However, you are not required to purchase the life or disability insurance from the mortgage company, and you can usually get more coverage for less per month with a term policy through another company.
Take, for example, the case of Elizabeth Smith. Elizabeth and her husband Bill worked hard to raise a down payment to buy a home. The Smiths had three children, and they both decided that Elizabeth should stay home with the kids. Bill had a good job and a nice paycheck so it wasn’t a burden. However, Bill was tragically killed in an auto crash. This left Elizabeth alone to support the family without an income.
Thankfully Bill had adequate life insurance to cover both the loss of income and the other debts. Elizabeth received a check from the life insurance company large enough to support her and the kids until they were grown, and enough money to pay off the mortgage on the home. This removed the largest monthly debt and gave the family the security of actually owning the house in which they lived. Elizabeth and the kids no longer had to worry about how they would meet the house payment. The insurance covered it all.
Unfortunately, Elizabeth’s case isn’t unique. Mortgage insurance, like any other insurance, is one of those things that you are very glad to have when you finally need it.
