Q

Why does it make sense to get a life insurance policy when I buy a home?

A

People tend to purchase life insurance to make sure that their family can cover all of their financial needs if something happens to them. If you purchased your home with a partner or spouse and/or if you have kids you are supporting, then a life insurance policy is one of the best ways to ensure that your family can pay off the rest of your mortgage. That way, they can continue living at home, even if they no longer have your income to depend on.

Q

Do I need more life insurance coverage if I own my own home?

A

The short answer is yes. Even if you have a life insurance policy from before you bought your house, owning a home is a much larger financial responsibility. You’ll want that additional coverage to make sure your family can fully cover the cost of your home if something happens to you. If you haven’t bought your house yet and are still looking, it’s a good idea to revisit your policy and decide if more coverage is needed. As a general rule, it is often recommended that you have 5 to 10 times your income in life insurance coverage.  Check out this piece for more tips and tricks on figuring out how much life insurance you need.

Q

How much life insurance should I get when buying a home?

A

It depends on how much overall coverage you want. This, in turn, will depend on a number of factors. Consider your house price, funeral costs, whether you have kids and whether you want to pay to put those kids through college, among other things.

Q

I only plan on living in my first home for a couple of years — do I still need a life insurance policy?

A

Getting a life insurance policy now is important to ensure your loved ones can handle any financial obligations immediately should something happen to you while you are still in your current home. Remember, plans can change, and your current home could easily become your forever home. However, if in the future you end up moving to another place, you can always update your policy as necessary to include more coverage.

Q

When should I get life insurance during the home-buying process?

A

It’s usually smart to get life insurance early in the home-buying process before you close or soon after. Applying sooner can help you lock in a lower premium while you are younger and in better health. That can make the policy more affordable over time. It also means your coverage is ready when your mortgage begins, which helps protect your family from added financial stress if something unexpected happens. If you already know a home purchase is coming, starting the process early gives you more time to compare options and choose coverage that fits your new responsibilities.

Q

Do I still need a life insurance policy if I have homeowner’s insurance? What’s the difference between homeowner’s insurance and life insurance?

A

Yes, you probably need both, because these two policies handle two different things. As a homeowner, you are obligated to have a separate homeowner’s insurance even if you have a life insurance. You may even be tempted to purchase an additional mortgage protection life insurance policy.

The biggest difference is that while homeowner’s insurance covers you financially for problems that occur from things like flooding or hail damage, mortgage protection insurance assures your mortgage lender that they won’t lose money if you stop making payments on the loan. In the case of mortgage protection insurance, your mortgage lender is the beneficiary. With term life insurance, though, you can designate your own beneficiaries. Should something happen to you, your beneficiaries would receive the death benefit for as long as you have the policy.

If it seems silly to have homeowner’s insurance and a life insurance policy at the same time, remember that life insurance covers more than just your home’s value. Depending on how much coverage you get, it could completely replace your income and pay for additional needs, like a college education for your child,. That way your family can continue living the lifestyle they’re used to, even if something were to happen to you. For a deeper look at how this works, visit our home buyers guide to choosing life insurance.