A home is very often the foundation of a family’s life — and the right life insurance policy can help you ensure that space remains a refuge for your loved ones no matter what challenges that future may bring.
That said, determining which policy is a good fit for your unique needs and circumstances as a homeowner is not always easy. We’ve put together the following guide to help you weigh the options and figure out next steps.
Your life insurance policy should provide enough funds to cover the mortgage, taxes, and home maintenance for at least one year. If you have children at home, you may want to consider having enough life insurance to cover the full mortgage to relieve that debt from your survivors.
In addition, it is important to also consider the loss of your income and any educational expenses you plan to cover for your children. The exact amount of life insurance you need will depend on your current income, your mortgage balance, access to other sources of income, and personal financial obligations.
There are two basic types of life insurance: Term, which provides coverage for a certain period of time. And permanent, which provides coverage throughout your lifetime. If you primarily need life insurance to cover your 30-year mortgage, a term policy may be your best bet. If, however, you want a policy that will not only cover your mortgage, but also provide income to your spouse after your death, a permanent policy is more likely to fit your needs.
The decision you make today about life insurance coverage may not be the right decision tomorrow. For example, in 10 years your mortgage balance should be significantly less than it is today — which means your loved ones wouldn’t need as much to pay it off in the event of your death. If, on the other hand, you have more children, renovate your home, or take on more debt, your needs for life insurance may increase. Remember to review your goals and circumstances each year and make relevant changes to your life insurance policy as necessary.
A second home or vacation property may still have an impact on your life insurance choices: If you hold a mortgage on the second home, you may want to choose a life insurance policy that can cover the payments for at least one year or possibly pay off the mortgage in the event of an unexpected tragedy. That way you’ll preserve a sanctuary for lasting memories and perhaps even provide a vehicle by which your spouse or other family members can earn future income.
Now that you have a handle on the amount and type of life insurance you may need, its time to compare policies and prices. Reach out to an insurance professional for further advice and options.
Insurance products are issued by: John Hancock Life Insurance Company (U.SA.), Boston. MA 02116 (not licensed in New York) and John Hancock Life Insurance Company of New York, Valhalla, NY 10595.