Speak with an experienced advisor! Owning a home is the American dream. However, when a loved one dies unexpectedly, owning a home can quickly become a nightmare. When an income earner dies, the surviving spouse is left to pay all expenses single-handedly. Unfortunately, bankruptcy is often only a year or two away when this happens.
Your home should be a place of safety, security, and comfort. Our homes are often our largest asset, most substantial investment, and biggest liability. The shelter and safety that our homes provide can shatter when the unthinkable happens, and a wage earner and family member dies unexpectedly.
Mortgage protection life insurance is an important tool to protect your family, to keep your home from going into foreclosure, and to keep your family from having to declare bankruptcy.
How can mortgage protection protect my family from bankruptcy?
Your home is at most risk of being lost to foreclosure one to two years following the death of an income earning loved spouse or partner. The surviving spouse or partner may have a small life insurance payout from the deceased family member’s employment, but it is rarely enough money to replace lost income, and pay off your home mortgage.
With the national home loan averaging over $200,000 and with mortgage payments averaging over $1,000 for a 30-year mortgage up 4%, it quickly becomes apparent that your home that has provided safety for so many years can be a financial burden when a loved one dies.
Getting your home paid off when a loved one dies eliminates the largest expense in most families’ budgets for the surviving family members. It will allow you to stay in the same neighborhood, city, and school district. Paying off your home also keeps your family members around friends and support groups in school, church, and other social activities.
How does mortgage protection protect my spouse or partner’s credit?
Not paying bills promptly, and getting your home foreclosed, will have a tremendous impact on your spouse or partner after you’re gone. It will make getting credit and borrowing money more expensive in the future, as well as much harder to get.
Many people choose not to plan and when the unimaginable happens and their only option is to start a GoFundMe page and ask for help and handouts from friends and strangers. This can easily be prevented with an affordable mortgage protection policy.
How can mortgage protection help me avoid bankruptcy while I am alive?
Medical bills are one of the most common reasons that people file for bankruptcy. A typical scenario is a family member gets sick, they can’t work, the bills pile up, the home is foreclosed, they lose the car, the bills keep piling up, and the family eventually has to file bankruptcy.
Did you know that a mortgage protection policy, if structured properly, can get you money before you die? Properly structured mortgage protection life insurance policies have add-on insurance riders to protect you while you are alive. These riders may cover critical illness, disability, heart attack, stroke, cancer, and other life-threatening diagnoses.
Disability insurance can often be included within mortgage protection policy. Disabilty can also be purchased outside of a mortgage protection policy.
Can mortgage protection insurance be used for medical bills?
A properly structured mortgage protection policy can be used however you want. If you had a $150,000 mortgage protection policy, lived in the house for eight years, had a $100,000 balance, and a spouse or family member died from an extended illness, you could easily accumulate $50,000 in medical bills.
In this example, your family could take $50,000 from the mortgage protection policy to pay off the medical bills, and use the remaining $100,000 to pay off the home. Your surviving spouse or partner would now have no medical bills or mortgage bills to pay in the future. They would be financially protected and would be able to keep your home in the future.
How long will bad credit hurt my family?
If your surviving spouse or partner files for bankruptcy, it may take seven to ten years (or longer) after losing the home or going through foreclosure to qualify to buy another home. Banks and lenders don’t like loaning money to people who have filed for bankruptcy in the past, so owning another home in the future is much more challenging after filing for bankruptcy.
What about bankruptcy and mortgage protection insurance/life insurance?
Many insurance companies will not offer life insurance to people who have a bankruptcy in their past. Some insurance companies may allow you to purchase a life insurance policy after a 5-7 year waiting period from the date the bankruptcy occurred. It will be difficult for your surviving spouse or partner to get mortgage protection or life insurance following a bankruptcy.
How can I protect my family from bankruptcy and losing our home?
Mortgage protection insurance is one of the most affordable and easy ways to protect your family when you die. Acceptance rates are very high, and the underwriting requirements allow many people diagnosed with illnesses to qualify for affordable monthly rates.
Are there other ways mortgage protection can help protect against bankruptcy?
Some companies offer “return of premium” mortgage protection policies, which allow you to get all or part of your money back at the end of a specified term. This can allow your surviving family to pay off your home early, or pay off other bills and liabilities when your insurance policy terminates.
Conclusion
If you care about your family and loved ones, you will protect them in life and death.
Mortgage protection policies are important financial tools to protect your home and family when you are gone. Saving your family from foreclosure and bankruptcy is easy to do with an affordable mortgage protection policy.
