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Do You Have to Have Life Insurance to Get a Mortgage?

You aren't required to have life insurance to qualify for a mortgage, but purchasing life insurance before buying a house can benefit you. If you die unexpectedly, a life insurance policy can offer peace of mind for your family. The death benefits can be used to pay your mortgage payment, along with other financial obligations.

Consider Your Family's Financial Situation 

Whether both you and your spouse contribute to the household income, you make the most money in your household or are a single parent, a life insurance policy can help your family cover the expense of a mortgage after your death. So if your spouse or family would have a hard time making mortgage payments after you die, your life insurance policy can provide them with the funds to help them do so. 

Even if you have enough money in savings or your spouse makes enough money on his or her own to cover your mortgage payments, life insurance is still a good idea if you have financial dependents or own a business. Not only can life insurance help your family make mortgage payments, it can also provide them with money to cover your funeral expenses, money to pay for college tuition(s), money to pay business taxes and money to fund a buy-sell agreement. 

What type of Life Insurance Should You Get?

There are two common types of life insurance available: term life and permanent life.

Term life insurance covers you for a specific "term," which can be anywhere from one to 30 years. This means that if you die during the term of your policy, your insurance provider will pay out a death benefit to your beneficiaries.

Permanent life insurance covers you for your entire life, so even if you buy a policy at 30 and die at 90, your insurance provider will still pay out a death benefit to your beneficiaries. Permanent insurance also acts as an investment vehicle that accumulates cash over time.

Term policies tend to be more affordable than permanent policies because they don't cover you for your entire life.

Finding a Policy 

Even though you don't have to have life insurance with your mortgage, purchasing a policy could help protect your family's finances. To find a policy that meets your needs, call 800-966-7169 to speak with a licensed agent.

 

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Sources:

https://www.nerdwallet.com/blog/insurance/who-needs-life-insurance/
https://www.nerdwallet.com/blog/insurance/what-is-the-difference-between-term-whole-life-insurance/

*Applications for insurance may be subject to acceptance by insurer. Rates and coverage amounts will depend upon the carrier selected.

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