How to Protect Against Foreclosure with Life Insurance

Posted by Paul F. Lynch on October 04, 2013

Buying a house is most likely the largest investment you’ll ever make. Chances are that your mortgage represents a large portion of your monthly financial obligations. And then, of course, there are maintenance costs, utilities, landscaping, property taxes, and other expenses.

The thought of your family facing foreclosure shortly after losing you is unsettling. That’s why protecting your home from the unexpected is so important.

Fortunately, with the right life insurance policy, your family can continue to live comfortably in the home you have worked so hard to provide.

Just as life insurance protects families from the unexpected, it can also protect your home. You pay fixed premiums that are guaranteed not to increase during the entire term you select, and if something happens to you, your beneficiaries will receive the face value of your policy.

With a traditional mortgage insurance policy, if you pass away, the policy proceeds go directly to the mortgage company to pay down your loan. But what about the rest of the household bills and expenses? With a term life insurance policy from SBLI, funds from the policy would be given to your beneficiaries, who could allocate the money as they choose.

Generally speaking, you should have a life insurance policy equal to 5 to 10 times your annual salary, depending on your current and anticipated financial obligations and other family income. An easy-to-use life insurance calculator is available on

When choosing a policy amount, it may make sense to cover the length of your mortgage term, the amount of the loan, or both. An SBLI life insurance professional can help you decide on the right amount of coverage.

Here are two life insurance 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 never to increase over the term selected.
  • Whole life insurance. Unlike term insurance, whole life provides coverage for your entire life, as long as the premiums are paid. In addition to the death benefit, the policy builds a tax-deferred cash value from which you can borrow. 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.

To learn more about term life and whole life insurance and how both can help protect your family and your home, call SBLI at 1-888-438-7254.

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