In this article we will discuss one use of Term Insurance and that is Mortgage Protection. This can be a very useful tool in any homeowner's toolbox. We have already discussed what exactly Term Insurance is, but if you have not read or know about it yet please click on the Term Insurance tab on the Catagories menu.

Meet Jack and Ruth

    Jack and Ruth have just purchased a home at a great deal here in Florida for $80,000. They are very excited, Jack is 30 and Ruth is 29. This sounds like their lives are right on track to start a family and have a happy life together. But what would happen to Ruth if Jack dies in 5 or 10 years? Do they have enough money put back so that Ruth can live a comfortable life taking care of the kids and be able to keep their wonderful home? 

    These are questions that many people do not think about, especially after they just bought their home. But this is something they should think about. Let's say that Jack and Ruth were smart when they got married and Jack took out a $25,000 life insurance policy on both of them. They both wanted to leave each one enough money for a funeral and some money to buy a little bit of time to get all the financial matters straight. That is great! But, is $25,000 enough to pay for a funeral, and, pay off the home they just bought for $80,000? No, it will never come close! So what can they do?

Mortgage Protection
    
    How this would work is purchase Mortgage Protection Insurance, all Mortgage Protection Insurance is, is a Term Life Insurance Policy for the amount they need to cover the Mortgage they have on their home. So in the case of Jack and Ruth they would need a $80,000 life insurance policy in Jack's name. But why Jack? Well the life expectancy for men is much lower than for women. That is why life insurance is cheaper for woman than men. Now would it be smart to replace the $25,000 policy they already have? That depends on their situation. How much money can they afford to pay for premiums?, etc... it is hard to say, that is a choice they would have to make and sit down and budget if they can afford paying for both or just replace it.

    So let's just say they opt to keep what they have and add the Mortgage Protection Insurance to what they have. They shop around and find a good price and call for an agent to meet with them and discuss their options. One very important addition they can add to the Mortgage Protection is a Rider. The name of this Rider is "Return of Premium Rider". What this does is say Jack and Ruth decide to purchase 20 years of Protection, and they add this Rider, at the end of the 20 years instead of paying all that money for 20 years and getting nothing back, they will get a nice big check from the insurace company for ALL OF THE MONEY THEY PAID FOR PREMIUMS! Sounds great doesn't it? Get the protection your family will need, and if nothing happens no problem you just get all your money back at the end of the policy date. 

    Many people now forget to think about protection. This can be extremely helpful for anyone who has just bought a home. And if you decide you need it, you can add the Return of Premium Rider to the policy and get all your money back if you never use it. Our lives are always changing, never think because you purchased a policy 10 years ago that it will give you the help you need now. If you need someone to stop by and look over what you have now to protection your family I will be more than happy to review your policy for free. To make sure you and your family get what you need when it matters the most.

Take Care!