Term Insurance as Mortgage Protection
Term Life Insurance is a relatively inexpensive way to protect against debt, replace income and lock in insurability for the future.
Term Life Insurance is commonly used in protecting against debt such as Mortgages or Student Loans.
Why pay for mortgage insurance from the bank? If something happens to the insured, the BANK GETS PAID!! With a private individual policy, you can CHOOSE whom the beneficiary would be and ensure that your LOVED ONES are protected, and not the bank. Personal Term Insurance allows for OPTIONS. Many of our clients protect their loved ones from their mortgage debt by taking out a Term Life Insurance Policy in an amount slightly greater than the loan amount for the duration of the mortgage. Similarly, many parents take Term Life Policies out on their children to protect against the massive COLLEGE DEBT that STUDENT LOANS can cause.
In the case of protecting against Student Loan Debt, the parent is actually doing themselves AND their child a favor. Most Student Loans will default back to the parent or guardian if the unthinkable happens, so it is generally a prudent and inexpensive protection to have in place. As far as assisting the child, the fact of the situation is that most Term Life Insurance Policies have a convertibility option that allows the insured to convert the Term Policy into a Permanent Policy and maintain their current health rating! Unfortunately, with every year that passes, who knows where we will be in regards to our health, so there is certainly an incentive to lock in beneficial health rating when we are young.
This is also why many of our clients place permanent life insurance policies on their children. While on the surface it may sound disagreeable, there are numerous advantages of this strategy:
1. Lock in a child’s insurability when they are young and healthy. Who knows what is to come, or what potential dread diseases are out there?
2. Children’s policies have great potential to grow in cash value. Many parents, work with their insurance professional to ensure these policies have the cash value to help pay for college educations or even set up a retirement fund for their children.
3. What if, the unimaginable happens? Most parents would need the income from the policy to help pay the bills during the months of bereavement.
Please contact an insurance specialist to review your needs and situation. This is not an offer to solicit insurance.
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