How Inflation Affects Your Death Benefit

When you buy Mortgage Protection Life Insurance in order to pay off your family’s mortgage in the event of your death, you can buy a life insurance policy with a death benefit that is not going to suffer the effects of inflation. Your mortgage is only going to decrease over time. Inflation may be present in the economy, but it is not going to lessen the value of the dollars your family receives in the form of a death benefit because your mortgage is not going to increase over time.

In most cases, any debt your beneficiaries decide to pay off with your death benefit will most likely have decreased since the policy was purchased. When Mortgage Protection Life Insurance is used to pay for expenses like tuition, there could be too little money in the death benefit to cover the costs because tuition expenses may have increased since the policy was purchased.

Choosing the Terms of Your Mortgage Protection Life Insurance Policy

Mortgages come in many different shapes and sizes. Some people choose large mortgages with a little extra cushion to be paid over the next thirty years. Others choose small mortgages with a payment period of just fifteen years. No matter which type of mortgage you choose, you can design your Mortgage Protection Life Insurance policy to protect it.

Mortgage Protection Life Insurance policies come in five-year increments and generally cover five-to-thirty-five years. You are not restricted to buying coverage that exactly matches your mortgage, so you can choose to buy a Mortgage Protection Life Insurance policy that extends longer than the term of your mortgage or even for fewer years than your mortgage. You can also choose a death benefit that is less than, equal to, or greater than the amount of your actual mortgage.

This flexibility in terms makes Mortgage Protection Life Insurance the perfect insurance for all your family’s death benefit needs.

Covering Funeral Expenses with Mortgage Protection Life Insurance

Funeral expenses often amount to more money than a family anticipates when a loved one dies. From the costs of the funeral, grave marker, services, limos, and burial or cremation, the fees associated with even budget funerals and burials amount to more than most families can afford to pay out of pocket.

When you take out your Mortgage Protection Life Insurance policy, be sure to build in some added death benefit to cover these expenses so that your family will not have to try to comparison shop for your final expenses. There is no need to buy a separate final expense policy--when you have a Mortgage Protection Life Insurance policy, you have the added flexibility of covering expenses outside of your mortgage with the death benefit.

Not only will your beneficiaries be afforded more time to heal when your final expenses are provided for in the policy death benefit, but they will also be saved from going through multiple claims forms.

Taxes on Death Benefits

One of the most attractive aspects of Mortgage Protection Life Insurance death benefit proceeds is that, when paid out, they are not subject to income taxes. This means that when your beneficiaries are paid the death benefit of your Mortgage Protection Life Insurance policy, they will not be required to include the proceeds on their tax forms and pay 35% taxes on them. Other assets awarded to your beneficiaries could be subject to capital gains and income taxes.

Mortgage Protection Life Insurance death benefit proceeds must be included in the estate paperwork and could be subject to estate taxes. Allowing a revocable or irrevocable trust to be policy owner and/or beneficiary could change the tax consequences of the Mortgage Protection Life Insurance death benefit. A meeting with your tax professional can help to give you an idea of the best way to structure your estate to ease any potential tax burden on your heirs.