Life Insurance

Disadvantages of Mortgage Life Insurance – Why Term Life is Better

Term Life Insurance Policy

Why term life insurance is better
1. Term life is more affordable: Because the underwriting process in mortgage term life is not as precise as that of a term insurance policy, the premiums can be quite high for mortgage life insurance. Term life is generally more affordable, with its economical premiums.
2. Death benefits in term life go to the insured’s beneficiaries: When you use a term life policy to cover your mortgage dues, your beneficiaries are in total control of the money. If you die many years into your term policy, your mortgage dues would have gone down considerably, which means that your beneficiaries get to retain any leftover cash.
3. Term offers a choice of policy formats: While mortgage life insurance has a decreasing term format, with term life you can opt for either decreasing term insurance or level term insurance. A decreasing term insurance policy will provide your beneficiaries with only enough money to clear your mortgage. A level term insurance policy on the other hand has a fixed death benefit amount, and therefore can be used to clear off more than just your mortgage amounts. For higher premiums you can also add more protection for other reasons, such as to replace your income, take care of your kids’ college fees, etc.
4. Doesn’t require a fresh policy if you decide to change As mentioned earlier, if you decide to refinance, your mortgage life policy ceases. However, with term, even if the underwriting process requires your mortgage documents, the life insurance can’t be revoked each time the structure of your finances change.
Make sure you are covered adequately
When you use a term life policy to cover your mortgage, remember that you need to take out additional term insurance to cover your other financial obligations in the event of your death.
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Life Insurance Policy

How to Choose an Appropriate Life Insurance Policy

Best Life Insurance Policy

Life insurance has been recognized as one of the basic step to achieve financial security. First, what is the purpose for you to get life insurance?

By answering this first question, you will have a good idea of what type of life insurance policy you need. If your answer is yes for temporary need, term insurance should be your choice. If there is no definable time when you need the coverage till, you should consider permanent insurance.

Second, how much coverage you will need?

“The more, the better“…only if you don’t mind spending extra money on premium. Now, you can easily answer this question based on the answers for the previous questions. For example, if covering the mortgage is your main purpose, you might need term insurance for 25 years, depending how long it will take to pay off the mortgage; or if you want to protect your child, then 20 years or 25 years will be a good benchmark considering of their age; of course, if for estate purpose, you will need permanent insurance.

Paying for life insurance is a long term commitment. The premium is decided by the age, gender, heath condition, death benefit amount and the type of insurance policies.

After calculation, she needs $1 million dollar coverage for 20 years, and $200,000 coverage permanently.

Solution 1: She takes $1 million permanent life insurance; the premium is about $350 monthly minimum.

The recommended solution: take $200,000 permanent policy with extra $800,000 term for 20 years; the premium will be about $150 monthly.

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Term Life Insurance Short

Short Term Life Insurance

Term Life Insurance

Short term life insurance is a kind of life insurance that was designed with temporary job loss in mind, although it doesn’t necessarily have to be for that (but usually is). Short term life policies are offered by insurers so that someone who has lost their job or is making a career transition can have life insurance coverage during their time between paying positions (assuming that these people only had group life insurance through their former employer and did not choose to convert it).

Short term life insurance policies do not build cash value and they last anywhere from one month to one year. There are two types of these policies: term life policies that cover death for any reason (except suicide), and accidental death policies that only pay out if the insured is killed by some kind of accident as defined by the policy’s stipulations. Accidental death policies have lower premiums. Short term life insurance policies can be bought for face amounts of $50,000 to $250,000.

Most short term life insurance policies have a conversion provision that allows you to decide to keep the policy for a new premium structure when its original short term expires. As far as companies go, Guarantee Trust Life is highly respected for regular coverage, and Globe Life is renowned as a provider of accidental death coverage.

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Insurance Term Life

What to Look For in a Term Life Insurance Policy

Term Life Insurance Whole Life

Get term insurance in place as soon as possible.

Having the right amountof insurance in place gives your family the ability to grieve with the peace of mind that they will be able to keep your home and feed the family.

So, how much insurance should you have in place? A good rule of thumb is ten times your annual income. For example, if you make $50,000 per year, you should have about $500,000 of term life insurance on yourself. If your family then invests the money into a good growth stock mutual fund with a long track record, they could pull eight to ten percent of the money out of the mutual fund to cover your lost income. If you are deeply in debt, you may want to increase this amount in order to pay off the debts upon your death and still allow them to invest ten times your income. There are other types of life insurance, but term insurance is by far the best deal. A whole life policy will cost you as much as ten times as much as term insurance and you will have a far lower level of coverage. The only thing to remember is that term insurance is coverage for a fixed “term,” or length of time, and at that point you will need to renew or lose the insurance. If you have a twenty year term policy, and you consistently invest $100 a month in a good mutual fund averaging twelve percent per year, you will have nearly $100,000 in the mutual fund when your term comes due.

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