Life Insurance and Your Home Loan
should be bought together but unfortunately this is not often the case. Of all the financial issues people have to consider in life – paying for university, buying a home, saving for retirement – the one they really don’t even like to think about a great deal, and if they do purchase it tend to do so rather grudgingly – is any form of life insurance. After all, who really wants to think about something as unpleasant as dying unexpectedly? For some it seems like bad luck, for others it’s just plain morbid but what’s for sure is that most people avoid even talking about life insurance like the plague.
However, like many things we really do not like or enjoy life insurance is a necessary ‘evil’, especially for those with the grown up responsibilities of marriage, family and home ownership.
When it comes to meeting the payments on a home loan it is the one expense that a surviving partner often struggles with most after their other half is no longer around anymore. If you are a co-homeowner consider your own situation for a moment. If your spouse or partner’s income was suddenly no longer available, would you have the resources to keep up with your bond payments on your home? Once put like this even those reluctant to face the issue of life insurance are pretty much forced to.
The Basics of Life Insurance and Home Loans
When anyone takes out a home bond loan the bank mandates that they purchase all kinds of extra protections. They must carry proper homeowner’s insurance at all times and have adequate cover to meet the expenses that might come along after a fire or a storm. But very few banks mandate that the loan principals take out insurance to cover the bond repayments should they die with the loan still left unfulfilled. Usually in order to have qualified for the loan in the first place the borrowers are gainfully employed and in reasonably good health, so there is really little need for the banks to emphasize such coverage.
This means that often homeowners are left to find that coverage for themselves. And such coverage is certainly out there, it’s just a matter of determining just how much you need and how much you can afford to take out at this time.
How Much Coverage Would I Need?
Just what kind of life insurance coverage you need to take out to cover the remaining payments on a home bond loan does vary from person to person and is something to be considered carefully. For example, even if your spouse has their own, separate income at the moment how much would their ability to work be affected if they needed to care for children alone? How much longer does your loan have to run? If your partner does not currently work what would the likelihood be that they could find employment support the family and their obligations quickly?
The bottom line is that if you own a home with an outstanding bond however much you would like to avoid the issue if you don’t have proper life insurance cover then now is the time to start changing that because unfortunately none of us know what tomorrow has in store for us.
To find out more about ‘Life Insurance and Your Home Loan‘ talk to one of our independent consultants, the consultation is free and could save you a lifetime of hurt, talk to us at www.sweidanandco.co.za