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Importance of Selecting the Right Mortgage Term Life Insurance Policy

The Freedom of Term Life Insurance

Mortgage Term Life Insurance issued by an independent insurance company, rather than your mortgage company, can offer your family tremendous flexibility in the event of the death of the insured. With Mortgage Term Life Insurance, your family can use the death benefit as they see fit. There is no obligation to pay off the balance of the mortgage with the death benefit proceeds if there are other, more pressing needs present. Your beneficiaries should have the ability to use the death benefit as they see fit. Should you purchase a Mortgage Term Life Insurance policy from your mortgage company, the company that issued your loan may be named as beneficiary, which will prevent your survivors from using the proceeds in whatever way they most need to after your death. With the peace of mind of knowing that your family is taken care of after your death.

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Travel Insurance vs Mortgage Term Life Insurance

If you are a frequent flyer, or if you are concerned about an accidental death, then you may think that travel or accidental death insurance is the right type of insurance to protect your family in the event of your death. Unfortunately, travel insurance can be an expensive safeguard with only a temporary benefit. When you invest in Mortgage Term Life Insurance instead of travel insurance or accidental death insurance, you know that your policy is there to pay off your mortgage and other debts in the event of your death—whether it’s a travel related death or an accident, or natural causes. Your premiums are put to better, more comprehensive use when they are paid to a Mortgage Term Life Insurance policy instead of a policy with limited criteria that must be responsible for the death in order for the death benefit to be paid out.

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Who Needs Mortgage Term Life Insurance?

Anyone who has debt is a worthy candidate for Mortgage Term Life Insurance. Even if you don’t have debt, but instead need income replacement, college tuition funds, and lifestyle continuation capital, then there is a need for Mortgage Term Life Insurance. There is no need to qualify for Mortgage Term Life Insurance with an actual mortgage. Mortgage Term Life Insurance is much like any other term policy out there. You can design it to have a decreasing death benefit (since debt decreases over time) or you can create a policy with a level death benefit so that you'll have enough to cover fixed future expenses such as college tuition or income replacement.

Whether you have a thirty-year mortgage or a fifteen-year mortgage, you can buy a Mortgage Term Life Insurance policy with a death benefit that lasts longer or ends before your actual mortgage. While the name sounds restrictive, Mortgage Term Life Insurance policies can be designed to suit your individual needs.

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Why You Need Mortgage Term Life Insurance After You Retire

If you are closing in on your retirement years, do not think that your need for life insurance phases out as your retirement benefits kick in. When thinking in terms of debt, ideally your debt will be paid off by the time you retire. That does not mean that you no longer have a need for Mortgage Term Life Insurance. Your family will have expenses to meet in funding your funeral and burial expenses. Allowing those fees to come out of your retirement accounts can put a major dent in your retirement savings and leave your surviving spouse with less to survive on. Additionally, you may wish to use your Mortgage Term Life Insurance death benefit proceeds to establish a trust for your children and grandchildren. With your Mortgage Term Life Insurance death benefit, you can have a positive impact on their lives by providing them with an easier start and the ability to provide better for their families.

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Differences between a Variable and Term Life Insurance Policy

The stock market is an impossible animal to predict. When you have a variable life insurance policy, you are paying additional premiums in order to invest them and your accrued cash values into insurance company-developed sub accounts that go up and down in value depending on their performance in the stock market. If your cash value goes down in value to nothing, your beneficiaries do still get the death benefit—but think of all the additional premium dollars you’ve invested in this policy that have amounted to nothing. With a Mortgage Term Life Insurance policy, you and your beneficiaries can get the same death benefit at a much lower premium rate. There is no risk since there are no cash values and you can instead use the additional premium dollars on things that improve your family’s life, such as paying off debt, saving for college or emergencies, or taking family vacations together.

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Insurance for Reduced Home Values

While we often think of real estate as an asset that can only increase in value, there are times when the value of your home may dip under the amount of your debt owed on the mortgage. It is during these times that it is especially comforting to own a Mortgage Term Life Insurance policy. Without a Mortgage Term Life Insurance policy, your family could be left with the burden of a home that is mortgaged for more than they can sell it for. After selling the home, your family will still be saddled with the unpaid debt that results from the difference between the sale value of the home and the mortgage amount. This burden can profoundly affect their level of comfort after they sell the home.

With Mortgage Term Life Insurance, you know that your family can not only pay off the mortgage in its entirety, but that they can also keep the home that you enjoyed as a family.

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