Mortgage protection
If one income disappeared tomorrow, how many payments could the household make before something had to change? For most families the honest answer is a handful, and the mortgage is the largest line on the page. Mortgage protection is life insurance sized to that problem, so a family grieving is not also a family moving.
Let us be plain about it
You have probably received a letter about this, printed to look like it came from your lender, with your loan amount and closing date on it. That is a marketing tactic and we do not use it. Here is what the product actually is.
What it is
A death benefit sized near your mortgage balance, for a term near the years you have left on the loan. If you die during that term, your family receives the money.
Who gets paid
The money goes to the person you name. They decide what to do with it. Paying the house off is usually the plan, but it stays their decision, made when they know what else they are facing.
What it costs
Term insurance is the least expensive kind. A healthy person in their thirties or forties covering a typical Charlotte-area mortgage is often looking at a figure well under a streaming subscription or two.
What it is not
Private mortgage insurance protects the lender if you default. This is the opposite. It protects your household, and you can hold it no matter who services the loan.
The arithmetic nobody runs
This is the question underneath the whole product, and it takes about five minutes with a bank statement. Most families have never done it, which is understandable. It is not a pleasant afternoon.
What actually happens
Sympathy is generous for a few weeks. The mortgage servicer is not part of that. Payments come due on the same schedule they always did.
What changes with a plan
The money arrives, usually within weeks. Nothing about the loss gets easier, but the housing question comes off the table.
Sizing it
Matching the death benefit to the loan balance is the tidy answer, and it is often the wrong one. A paid-off house still has taxes, insurance, upkeep, and everything that is not the house.
Option one
Enough to retire the loan. Clean, easy to explain, and the least expensive version.
Option two
The loan, plus a year or two of ordinary expenses so nobody is job hunting in the first month.
Option three
House, income replacement, childcare, and college if that matters to you. Usually one policy rather than four.
The term
Commonly matched to the years left on the loan, though the youngest child's age is often the better anchor.
Why we bring it up
People call us about Medicare, or a rollover, or a policy that arrived in the mail. Almost nobody calls about what happens to the house. It is the single largest obligation most families carry and the one they are least likely to have planned around, so we ask about it whether or not it is why you got in touch.
The work is not complicated. We look at the balance, the years remaining, who earns what, what coverage you already have through work or elsewhere, and whether there is a gap. Frequently there is not, and that is a fine morning's work too.
If there is a gap, you will see the number and what closing it costs per month. Then you decide. We are not going to call you twice a week about it.
Next step
Bring your mortgage statement and whatever coverage you already have. We will work out whether there is a gap and what closing it would cost. It takes about twenty minutes and costs nothing.
Plenty of these end with us telling someone they already have enough coverage. That is a good outcome and we will say so plainly.
