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Life insurance can help you protect your home in death
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You and your family have worked hard to purchase your home, any rental properties, or other real estate holdings. You qualified for that mortgage due to your income level, excellent credit rating, and financial history. But what would happen if something unexpected happened to you? Besides the emotional stress, a surviving spouse may experience a significant decrease in household income that could lead to foreclosure. That’s why many banks and mortgage companies encourage homeowners to purchase mortgage life insurance.

Essentially, you purchase mortgage life insurance so that in the event of a sudden death, funds are available to meet any outstanding mortgage balance. The type of insurance you purchase can greatly affect your surviving family members’ options. Let’s look at some options.

Life insurance from

a lender vs. an

insurance company

When you purchase insurance from a bank or mortgage company, in most cases you pay the premiums but the lender receives the proceeds at the insured’s death, and your family receives the deed to the house.

However, sometimes surviving families may not want to keep their homes. They may want to move closer to other family members or relocate for different reasons like a new job. Personally owned life insurance offers more choices and control because the surviving beneficiaries — not the lender — receives the insurance proceeds. Then they decide what to do with the money, whether it’s paying off the mortgage in one lump sum, continuing to pay it down periodically, or selling the house. And, personally owned life insurance is portable, which means, if you move in a few years, you won’t have to replace your insurance (which could be costly). Furthermore, even after the mortgage is paid, personally owned life insurance can provide other valuable benefits.


Make a choice today

Whether you decide to purchase mortgage life insurance through a bank or insurance agent, the key is to be prepared. There is a real chance that someday one person will be completely responsible for your family’s finances. Taking the necessary steps today can ensure your family’s financial future tomorrow.


I will be holding a financial education workshop at Isadore’s in Manteca on Thursday, Nov. 7, 2013 at 5:30 p.m. If you would like to attend please RSVP to Fred at (559) 447-3604 as seating is limited. There is no cost to attend and is for educational purposes only.


This educational third-party article is being provided as a courtesy by Frederick Rich owner of Rich Financial & Insurance Services, CA Ins. Lic #0E38994.