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Life insurance policies are not required when taking a mortgage. However most people take it out so there mortgage can be paid when they die. It is one more way to protect the surviving spouse. Getting Life Insurance should be a high priority, especially If you are the sole income-earner for a large family. If you have left no will, it can help pay for legal, funeral, and medical costs if your family savings cannot cover it all.
There are two basic categories of life insurance: term life (temporary insurance) and whole life (permanent insurance). Speak to your insurance agent to see which is best for you. The proceeds of life insurance are paid directly to the beneficiary and is not subject to taxation. Most people feel that 5 times there yearly income is a adequate life insurance policy amount. But depending on your lifestyle and amount of debt you may want to purchase a larger policy. Your mortgage broker may be able to refer you to a good insurance agent. It is important to shop for life insurance when you are realativly young and in good health. Once you procure a good life insurance policy when you are young it normally will automatically renew so you won't have to worry about qualifying as you age or develop health problems. You do not need to have life insurance, but it is recommended. Life insurance can be a great benefit and relief for your family if anything should happen. This would help your family pay off any bills that were left, and help with the mortgage payments on your home. When comparing policies, it is important to find out if the death benefit remains level throughout the term of the policy or decreases with time. Remember, as your home appreciates you may be refinancing so a decreasing policy may save a few dollars but be inadequate for mortgage protection. Life insurance can be a good investment if your family or children would be in a difficult financial position in the event of your death. If you are financial sound, there can be other more profitable investments during your lifetime. Today, where the real estate values are high, if it takes both incomes of the husband and wife to qualify for the loan, then it makes good sense for both to carry term life insurance (also known as mortgage insurance that gradually decreases with loan amount). Too many times a spouse is left with the entire house payment, that they cannot afford on their own income, and are forced to do a quick sale and worst case scenerio are headed into foreclosure. Life Insurance polocies are also a great investment. There are also polocies that you may deffer your taxes on any gains. I'd be happy to help you find a personal finance advivsor to assist you.
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