Life Happens – Be Prepared – Part 8 of a 12 part series
Posted by Dimmitt Insurance on
Life Insurance Can Pay Off Your Mortgage
No one really likes making that mortgage payment every month. But, if you are doing okay, working as you usually do, it is something you can do. Here’s a harsh, fairly negative view, though. What happens if your family isn’t able to keep making those payments because your income is no longer available to them? Could they do so? Would they lose their home? With the help of a life insurance policy, not only can the policy help your family’s financial need, but it may help to pay off the mortgage as well.
Life Insurance and Your Mortgage: What’s the Link?
With a life insurance policy in place, your loved ones have funding available to handle just about any need. Should you die while the policy is in place, your loved ones receive a lump sum payment. This is called the death benefit. The funds become available shortly after the death. There are no taxes involved. There’s little delay.
Your loved ones can use these funds to meet any need. That includes using the funds to pay the mortgage payment each month. However, you may want to choose a significantly larger payment that can pay off the mortgage in total. For example, a term life insurance policy for $200,000 can pay off your mortgage debt of $150,000. It then allows your listed beneficiary to use the funds for any other needs they have. They no longer need to worry about the actual mortgage payment any longer. They own the home outright.
There are ways to create a trust to funnel the funds from a life insurance policy directly to it and then instruct the trust to pay off the debt. Or, you can list your beneficiary – the person who receives your death benefit – to obtain the funds to use at his or her discretion.
In all cases, your life insurance policy can help minimize the financial obligations on your loved ones. It gives them the freedom to move on financially.
Learn more about how this can work in your situation by calling Dimmitt Insurance. We’re here to speak to you about all of your needs. For a no-obligation quote, call 866-763-6627 or use our online form.