So you’ve finally closed on your house. Congratulations! Homeownership can be one of the most rewarding experiences in life. You may not realize, but it took years of financial responsibility to be able to accomplish the feat of purchasing a home. Making sure that your bills were paid on time sure has paid off! You are now part of the financially responsible group of people called homeowners. Go ahead and give yourself a pat on the back. Just one more thing to do which will ensure you and your family can continue to enjoy the financial stability that you have provided for many years to come. That is making sure you have a properly set up a mortgage protection plan.
What is mortgage protection?
- Mortgage protection is a combination of life insurance, disability insurance, and an emergency fund.
- If the breadwinner of your family were to become seriously ill or pass away suddenly and unexpectedly would it affect your family financially?
- A comprehensive mortgage protection plan will address these concerns.
Life insurance
- Life insurance will pay your beneficiary a death benefit amount should you pass away suddenly and unexpectedly.
- The death benefit amount you choose should be enough to pay off the entire mortgage.
- There are many different kinds of plans available today with term, whole, and universal life being the most popular.
- Living benefits riders allow you to pay off your entire mortgage in the event of terminal, chronic, or critical illnesses.
- Return of premium rider will provide a return on all money paid into the plan at the designated end of the term.
Disability Income Insurance
- Disability income insurance will pay you a monthly portion of lost income in the event that you can not perform the duties of your job due to a disability.
- Your ability to produce income is one of your most valuable assets.
- Employer sponsored disability income insurance plans may restrict the coverage to job related disabilities only.
- Some life insurance plans can include disability income coverage as a rider.
Emergency Fund
- It will provide you access to money to pay bills in the event of unemployment or some other non health related emergencies.
- At least six months of living expenses is the goal for your emergency fund.
- 401k’s and other qualified retirement plans that have strict penalties for early withdraws make them unsuitable for use as an emergency fund.
- Life insurance plans that accumulate cash value could be accessed for any reason after the plan has been in effect for a certain amount of time.
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Hey Daniel!
Thanks for the info – good stuff.