How to Combat Foreclosure with Life Insurance

SBLI of Massachusetts

December 15, 2010

The housing market has taken us on quite a ride in recent years, hasn’t it? That’s why, now more than ever, protecting your family and your home with a dependable investment like life insurance is critical.

Your home is probably your biggest investment and if something were to happen to you, could your family continue to make the mortgage payments and maintain the lifestyle you’ve always envisioned for them? I know, just the thought of not being there is unsettling but you have to be prepared.

How much do you need? Generally speaking, a person should have a policy amount equal to approximately 5 to 10 times his or her annual salary, depending on current and anticipated financial obligations and other family income. An easy-to-use life insurance calculator is available at SBLI’s website.

Also, pay close attention to the outstanding balance on your mortgage. If you recently secured a 30-year mortgage or are considering one, select a life insurance policy accordingly. For those who have refinanced their mortgages lately, perhaps increasing the loan amount to take cash out of equity, now is a good time to reevaluate your life insurance needs.

Here are two products to consider:

• Guaranteed level premium term life insurance—term life policies provide a set death benefit for a specified length of time, usually 10, 15, 20, 25 or 30 years, with premiums guaranteed to never increase over the term selected.
• Whole life insurance—unlike term insurance, whole life continues indefinitely as long as the premiums are paid, and, in addition to the death benefit, the policy builds up a cash value which is generally tax deferred. Whole life policies are typically more expensive than term policies.

With either product, your premium will ultimately be determined by your health and other underwriting factors.*

*Policy forms B-46 series and B-40 series