Your marriage vows and your mortgage are often intertwined. Whether or not both of you signed the loan documents, the death of your husband could cause you to lose your home. If your husband has obtained insurance for your family's needs, this can cover your mortgage and make life without your husband less insecure.
Term Life Insurance
Unless your husband has health issues, term life insurance is often the least expensive option for paying off your mortgage, according to the AARP. As the recipient of the money from a term policy, you can prioritize how to handle all of the financial obligations you are facing after your husband’s death. Normally, the industry standard 10-year and 20-year term policies won’t cover the full term of a traditional 30-year mortgage. The premium costs also increase as your husband ages.
Whole life insurance is an option for covering your mortgage payoff if your husband buys a policy at a young age. For people in their 20s and early 30s, the costs are significantly less than they are for people over 50, according to Kiplinger.com. The premiums will likely be higher than what you’ll pay for term insurance, but they remain constant as your husband ages. Consider buying enough insurance for your mortgage payoff and a year or more of living expenses if you can afford the premiums.
Mortgage life insurance for a surviving spouse pays the entire mortgage balance on your home in the event of the death of your husband, but your mortgage company is the sole beneficiary of this policy. The initial insurance amount is the total amount of the principal and interest for your mortgage. The payments you make to keep the insurance in effect often remain level throughout the term, but the amount the policy pays is normally limited to the outstanding balance. While this type of policy pays the mortgage off, you will have to pay future housing expenses on your own, such as property taxes, casualty insurance or homeowner association fees.
The type of insurance you choose is the main factor in the cost you’ll have to bear. Your husband’s age, health and the total owed on your mortgage also affect what you’ll shell out annually for insurance to pay off your mortgage. Insuring your mortgage with an employer-sponsored group life insurance may be tempting, but workers often lose this type of life insurance if the job ends. Disability of the primary income earner in a household causes more than 50 percent of mortgage defaults, according to Bankrate.com. Unless you buy a separate rider, most life insurance policies do not pay the outstanding balance on the mortgage if your husband becomes disabled.
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