Can You Buy A Mortgage And Life Insurance At The Same Time?

A lot of people buy their mortgages and life insurances when they buy their houses. This seems to make sense.

2 min read
Can You Buy A Mortgage And Life Insurance At The Same Time?
Photo by Tetiana SHYSHKINA / Unsplash

A lot of people buy their mortgages and life insurances when they buy their houses. This seems to make sense. When you buy your house, you are buying all your financial assets. You want to know that if something major happens, you have some cash to fall back on. To do this, you need to buy a mortgage and life insurance policy. This way, you will be covered no matter what happens.

The problem is that this can be confusing. If you buy both your mortgage and life insurance from the same bank or mortgage company, they are required to give you insurance on both items. So how is this useful? Banks want you to use their services. It is much more cost efficient for them to insure your mortgage and then give you your own insurance policy, as opposed to you having to pay for both policies separately.

When you have both your mortgage and life insurance policy, you will be covered. This means that your family will not suffer financially because you were unable to pay your bills. When you have both your mortgage and life insurance, you are protecting them from any debts that you may still owe. You will have the peace of mind knowing that whatever happens, they are protected. This is far better than being left in a position where you are struggling to make ends meet while wondering how you will keep your family protected.

When you are looking for a mortgage and life insurance at the same time, there are some things you will want to consider. Will you want to include the mortgage into the policy? You will have to set up an escrow account for this. It is good to have some money set aside for this so that if you do have problems paying the premiums, you will not be stuck paying all of the money upfront. However, you will want to make sure that you have enough money set aside for the life insurance policy as well.

What is the interest rate of the life insurance policy? You will want to get the highest possible rate. While this does have to do with your credit score, if you can secure a higher rate on the life insurance policy then this is a very smart move. In order to do this you will need to do some research into the life insurance rates of various companies. You will need to compare the cost of the policies in order to find out which one will be the better deal.

Where will you be getting the mortgage and life insurance from? The two policies will generally be handled by the same company. However, it is always a good idea to have separate plans in case one fails. If this were to happen the other company would have taken over and you would not be covered. Therefore you want to make sure you have one company's plan in place and the other's plan with them.

You need to know that the mortgage and life insurance are considered joint accounts. This means that the mortgage is considered a debt on the life insurance policy. When this happens, you can end up losing money if one of these ends up being insufficient to pay off the mortgage.

As you can see buying mortgage and life insurance at the same time is a smart thing to do. Although there are risks involved, the two insurance products will usually work out cheaper for you when combined. Remember, the mortgage is considered a debt on the life policy. If the mortgage is insufficient for the payments of the insurance, the life policy is going to go into a negative status.