Why Life Insurance Matters for New Homeowners

life insurance

It addresses a significant financial risk.

If you buy a home and you have no life insurance, there is a financial risk. It may not be immediately evident, but it must be acknowledged – and it should be addressed.

What if you die, and your spouse or partner is left to pay off the mortgage alone? This possibility may seem remote, and it may be hard for you to contemplate. It deserves consideration regardless.

Imagine your loved one having to handle that 15-year or 30-year debt by themselves. (Or the debt on an adjustable-rate loan or jumbo mortgage.) Additionally, how would that heavy financial burden come to impact your children’s lives? These tragedies do occur and do bring these kinds of emotional and financial challenges. A life insurance payout may provide some help for a homeowner in the event of such a crisis.

When you buy life insurance, the coverage amount should reflect your mortgage debt. You will need enough coverage to help your spouse, partner, or heirs deal with the outstanding home loan balance, should you pass away prematurely.1,2

Term life insurance may meet the need. If you are the typical homeowner, you will stay in your current home for about ten years. (Back in 2006, the average homeowner tenure was just six years.) As you may move up, move to another region with different home values, or even rent in the future, a term policy that lets you renew or modify coverage could suffice.1

On the other hand, permanent life insurance may be more suitable. The reality is that inflation decreases the value of term life coverage over time. Suppose you buy a 20-year term policy offering $250,000 of coverage today. At just 4% annual inflation, that coverage will be worth 56% less in 2038 – and your home may be worth much more in 2038 than it is now.2

Moreover, the cost of term life insurance rises as you age. A term life policy is cheap when you are young, but if you want a new one after your initial term policy sunsets, you may find the premiums dramatically more expensive. In contrast, premiums on a permanent (whole) life policy are locked in, effectively becoming more manageable as time goes by. You may want permanent life for other financial reasons as well, reasons that have nothing to do with your home. A permanent life policy has the potential to accumulate cash value in the future; a term life policy does not.2

A homeowner should carefully consider life insurance coverage options. If you lack coverage today, talk to a qualified insurance professional about your options, so that you can insure yourself for tomorrow.

Ronit Rogoszinski, CFP® may be reached at 800.773.9282 or rrogoszinski@slatestonewealth.com

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

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To contact Ronit please feel free to reach her on 800-773-9282 or rrogoszinski@slatestonewealth.com

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Citations.

1 – themortgagereports.com/26307/homebuyer-tenure-how-long-are-people-staying-in-their-houses [3/17/17]

2 – entrepreneur.com/article/310731 [3/22/18]

Ronit RogoszinkskiRonit Rogoszinski has been demystifying investment strategies for individuals, families and business owners for over 25 years.  Specializing in transitioning widows and widowers, pre-retirees and divorced individuals through major life changes, Ronit’s expertise is translated to actionable, prudent strategies that are   customized to each individual’s unique   situation. As a result, Ronit has become a trusted advisor to her clients, developing lifelong friendships while partnering in the management of their financial plans.

 

Ronit Rogoszinski
Author: Ronit Rogoszinski

Ronit Rogoszinski is a passionate advocate of financial literacy for women who specialized in transitioning widows, pre-retirees and divorced individuals through major life changes. Applying her skills to each client’s circumstances enables her to translate recommendations into actionable, prudent strategies that are customized to each clients’ unique situation. As a result, Ronit has become a trusted advisor to her clients, developing lifelong friendships while partnering in the management of their financial plans. Ronit is a CERTIFIED FINANCIAL PLANNER ™ certificant who combines formal education with life long experience, which has led to a holistic all-encompassing approach for her clients and the creation of Women+Wealth Solutions. Individuals and families with inheritance, legal settlements, or sale of businesses who seek to become educated and confident in working with their financial advisor, look to Ronit for guidance in gaining financial knowledge, budget and cash flow management, portfolio and retirement solutions, as well as working with other outside professionals to best serve the client with guidance towards legal and tax solutions. Ronit’s calm, personal and relaxed nature helps put her clients at ease while remaining focused on the mission at hand, which is to help her clients realize their financial goals. Securities offered through...

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