Life Insurance or insurance for home if spouse dies...?

Question

... we don't have life insurance yet. When is a good age to get it?

We bought a new house last year, and keep getting these offers for insuring the house in case of accident or death of a spouse. Is it a good idea to pay a premium for this? Does life insurance do the same thing? Which is better?

Answer 1

Now is a good time to buy it.  The sooner, the better, because the younger you are, the cheaper the premium will be.

I would also advise against buying 'mortgage insurance' and suggest just going with regular life insurance.  Mortgage insurance benefits lower as time goes on.  

Call your agent, there are many options for life insurance-either term insurance (cheaper but it ends after a specified term), or whole life/permanent policies--which gain cash value, but are a bit more in premium.  Depending on your budget, your agent will help you decide what is best for you at this time, whether it be one or the other, or even a combination of both.

Answer 2

Fedora Girl,

Call the agent that writes the insurance for your home and auto. He or she will be able to provide you a term policy for a very low premium. Don't buy it from the mortgage company, their rate per thousand of benefit will almost certainly be higher.

The policy offered by the mortgage company will likely pay off the mortgage note but depending upon the terms of your mortgage and your financial situation you might not want to pay off the mortgage. You may want to continue making payments on the mortgage and use the proceeds to cover other needs.

You also have to be aware of the type of coverage offered by the mortgage company. If they offer an accident policy the rate will be very low but the policy will only pay in the event of an accidental death. An accident policy will not pay if your spouse dies of a heart attack or contracts cancer.

Answer 3

It's not about what AGE you are, it's about what you need it to do.

Generally, what they're trying to sell you is life insurance that goes down in value, and only pays the mortgage.  It's a ripoff.  If you want life insurance, let it pay the spouse, and get the kind that pays the same amount regardless of when you die.

I like 20 year term, with guaranteed renewable and convertable clauses.

Answer 4

I suggest that you meet with one or more insurance agents or financial planners.

You and your spouse (I assume) will face a lot of speed bumps in your lives.  Many of these speed bumps will have financial consequences - some expensive, some inexpensive.  Insurance helps out with the expensive ones.

A knowledgeable financial professional can guide you to understand the financial risks that you take EVERY DAY and then guide you through your choices of insurance coverages.

YOU and your spouse need to set your goals (financial and life goals) and then work towards achieving them.

Good Luck

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Answer 5

It's important to have life insurance, especially when purchasing a house.

When a spouse dies unexpectedly the last thing the surviving spouse needs is to worry about how they are going to continue to make mortgage payments.

In our case my wife and purchased two type of life insurance policies.

1)  A whole life - premium and death amount remains the same for the life of the policy. We bought this policy to pay for final expenses such as funeral, taxes, etc.

2) A 30 year term life - Cost a lot less then whole life but the premium and face amount is only guaranteed for 30 years.  We purchased this policy to payoff our home, credit cards and to help the surviving spouse with expenses associated with raising our kids.

By purchasing a combination of the two we were able to get a lot of insurance for a lower cost.

For more information on getting life quotes I would suggest trying http://www.InsuranceEasy.org

This is one of the better consumer insurance sites on the web that I have come across.  They offer links to free on-line rating services that will provide quotes for almost any kind of insurance that you need.

I would request not only life insurance quotes from their site but I would also request auto and homeowner quotes.  Because auto insurance and homeowners rates can vary hundreds of dollars from one company to the next you may actually be able to save enough money on these policies to pay for the life policies that need.

Hope this helps.

God Bless!

Answer 6

Usually anything labeled or marketed specifically as mortgage life insurance is not a great deal.  Very expensive for the amount of coverage that you get.  

Your decision to get life insurance doesn't really have anything to do with paying off the mortgage anyway.  It should come down to replacing the lost income if you or your spouse die.  If you have a family that relies on your income it is never too early to purchase life insurance.  You need to make sure the monthly bills will be paid.  

It's kind of morbid, but the best way to determine how much life insurance you need on each spouse is to imagine what would happen if each one of you died tomorrow.  Would you want to keep the same lifestyle?  Would you sell the house and move into an apartment?  Why buy life insurance to pay off your house if wouldn't want to stay there by yourself anyway?  

I've attached a blog post that shows more detail how this other guy went through the process.  

http://www.moolanomy.com/623/buying-life...

Answer 7

The sooner you get it, the better.  But don't buy "mortgage insurance" - it's not a good deal.  Buy regular life insurance.