If you own a home, it is incredibly important to have a life insurance policy in place. Why? After your death, this coverage might help pay off your mortgage. It can therefore help keep your family from an unnecessary financial burden. Here are surprising four benefits to consider.
Reason #1: Eliminates Having a Monthly Housing Expense
Would your spouse return to work immediately after your death or would they need time to grieve? In times of crisis, it can be difficult for surviving family members to deal with the financial obligations and lack of extra income associated with losing a loved one.
Having a life insurance policy to pay off your mortgage can possibly eliminate having a monthly housing expense. This often allows them to take time off without having to worry about a foreclosure.
Reason #2: Strengthens the Investment You Made While Living
Another benefit of having a life insurance policy to pay off your mortgage is that it strengthens the investment you made while living. Let's take a look at this idea. If the home becomes paid off, your spouse or family members can use the money they would have earmarked for a mortgage payment to make improvements, adding to the overall value of the property.
Reason #3: Gives Your Family a Solid Asset
A paid off home also gives your family a solid asset that can sell for other reasons. For example, if you have a child nearing college or your spouse decides to get a degree, the property might sell for a large profit to help pay for tuition costs.
But school isn’t the only reason someone might sell. The catalyst for selling a family home is often personal and specific, but having the property paid off by a life insurance policy can help. In the end, this can increase your eventual profit from the property.
Reason #4: The Ability to Utilize Equity
Another surprising benefit of having a life insurance policy pay off your mortgage is that it gives your family the flexibility to utilize equity as they see fit. You probably won’t need to pay off your mortgage only using your life insurance policy, as all those years in which you made on-time payments grows the equity. This allows your family the ability to take out an equity loan or line of credit to suit their needs after your passing.