A Homebuyer’s Guide to Life Insurance

Congrats on your new home! Now it’s time to think about life insurance. How would your significant other handle the mortgage if you were gone? We have the answers in our guide to life insurance for new homeowners.

As we get older, we start to think about the really important financial aspects of personal finance… like buying a life insurance policy. Besides providing for your family and covering funeral expenses, one really good reason to consider coverage is if you’re a new homeowner.

Buying a house is a significant expense and a big responsibility. Not only are you signing on for 15 or 30 years of debt, but you are establishing your family’s home. And you hope they wouldn’t have to move in the event of your passing.

So today, let’s talk a bit about choosing the best life insurance for homeowners. We’ll discuss some of the more important considerations involved in picking the right coverage and the companies that offer your perfect policy.

What to Consider

Calculating the right life insurance coverage for you and your family is never easy. Each family’s needs are different from the next, and you’ll need to consider a number of factors. Some of these are:

• Your current salary
• Existing debt
• Outstanding mortgage loans
• Funeral expenses
• Future expenses, such as your children’s education
• Health insurance coverage
• Your family’s monthly bills

If you’re a homeowner–especially if you bought your home recently–your mortgage should be one of the biggest factors in calculating a coverage amount. After all, you probably don’t want your family to be forced out of their home (whilst dealing with their newfound grief, no less). So, you’ll need to ensure that your policy payout will pay the mortgage.

It’s easy to find a term policy that provides just enough coverage for your remaining mortgage debt. These types of life insurance products have lower monthly costs but allow you to choose a sufficient coverage amount for a specific number of years.

If needs change–you have additional children, your salary increases or decreases, you buy a different home, or household expenses shift–you can often alter the coverage amount mid-policy, too. Be sure to read the fine print for your chosen policy to see whether you’re able to make coverage changes and, if so, how often it’s allowed.

Our Selection Methodology

Choosing the perfect insurance company is tricky. Obviously, price is a consideration. After all, you’ll be paying for your coverage each month for years to come. You want it to be affordable!

However, price shouldn’t be the only concern. You want to pick a life insurance company that has a history of reliability and a record of good customer service. You want to ensure timely payouts. And perhaps flexibility (such as the ability to opt in for a living benefits rider) is a priority for you.

Lastly, you want to ensure that the company not only offers coverage in the amount that you need, but that you can shop for and purchase a policy both quickly and easily.

We compared most life insurance companies in the industry today to determine which ones truly are the best for homeowners. We looked at coverage limits, customer satisfaction, flexibility of benefits, and, of course, pricing.

This is what we found.

Our Top Pick

After reviewing all of these different companies, we’ve determined that our top pick overall is Haven Life. The company has a long history of excellent customer service, financial security, and great benefits.

Backed by MassMutual, Haven Life offers policies up to $1,000,000. This is more than likely enough to not only cover your new mortgage balance, but also replace your salary and provide for your family’s future if you were to pass away.

The neatest feature is probably the InstantTerm option. It allows applicants 45 or under the ability to apply for a policy online, sans medical exam, and get approved immediately. If you’re looking for quick, easy coverage that’s reliable and adequate, Haven Life has what you need.

Top 5

Here are the companies that we consider to be the best five. These are where you should look first when seeking out your next (or first!) life insurance policy as a homeowner.

TIAA Life

If you’re looking for affordable coverage with a number of term options, consider TIAA Life. Policies are available for periods of 10, 15, 20, or 30 years, and you can select coverage in excess of $1,000,000.

Applying for a TIAA Life insurance policy involves a complimentary health screening to determine eligibility and calculate premiums. If you need coverage quickly, this probably isn’t the company for you. Receiving a final decision on your coverage usually takes about three or four weeks from the time you apply and complete your health screening.

However, A.M. Best gave TIAA Life a financial strength rating of A++ (or Superior). One other great thing about TIAA Life is that they allow term policyholders to convert over to permanent policies at any time.

Haven Life

Haven Life is a popular insurance company for buying term coverage. It also has a history of customer satisfaction.

Term policies are available with coverage up to $1 million. You’re eligible for coverage as long as you’re a US citizen between the ages of 18 and 64 and not active-duty military. Coverage is available in all 50 states (+the District of Columbia), and they offer an InstantTerm decision process (without a medical exam) for qualified and healthy applicants that are 45 or younger. This means that you could get coverage that begins immediately, instead of waiting for a lengthy exam and underwriting process.

Haven Life policies are backed by MassMutual, a life insurance company with over 160 years of experience in the industry. They have a history of great customer satisfaction (A.M. Best gave them the highest possible financial ratings, for instance), are commission-free, and even offer extras like an accelerated death benefit.

Amica

If you need affordable coverage of $250,000 or more, Amica is a great company to consider. Their policies start at $100,000 and even go beyond $1,000,000. They offer term lengths of 10, 15, 20, 25, or even 30 years. If you are looking at a policy beyond $250,000, additional discounts are also available.

Coverage will not decrease as you get older, even up to age 95. The company also offers a Terminal Illness Rider in case you become ill and want to utilize living benefits. A.M. Best affirmed Amica Life with an A+ (Superior) rating, as well.

Prudential

If you’re looking for even more coverage, Prudential could be the right insurance company for you. Depending on your age and other underwriting factors, they offer policies worth up to $10 million (you even have the option of requesting more coverage than that!).

Prudential term policies last as many as 30 years, and you can add features like living needs or waiver of premium benefits, as well as a children’s protection rider. With Prudential MyTerm, you can apply online for coverage up to $250,000 and get an answer in mere minutes. There are no in-person medical exams, and coverage can begin right away.

The company also offers permanent life insurance policies. Lastly, Prudential has received an A+ rating from A.M. Best.

AIG Direct

If you’re looking for the most popular life insurance company with widespread, satisfied clients, AIG is where you want to look. The company, founded in 1919, has over 90 million customers across 100+ countries. It offers a number of life insurance products, with term life being one of their most popular.

AIG Direct offers term policies ranging from 10 to 30 years in length. You can choose a coverage amount of up to $500,000. And they also offer things like Quality of Life, which is a living benefit product available to policyholders.

Best for . . .

It’s hard to say which company is the “best” one, as there are so many individual factors to consider. However, a few of the companies we reviewed stand out for specific reasons.

Best for a quick policy decision: Haven Life

If you’re looking for a fast search and final decision, with the potential for immediate coverage, look no further than Haven Life. If you’re 45 or under and healthy, you can bypass the medical exam process and get an instant decision online.

Best for a lot of coverage: Prudential

If you’re looking for a high-dollar policy, Prudential could be the perfect insurance company for you. With coverage available well into the millions, you’re sure to find a policy that will not only take care of your remaining mortgage, but also provide for your family’s needs as long as you’d like.

Best for a low price: Amica

If you’re looking for enough coverage to pay off your mortgage and provide for your family’s needs in the case of your death, Amica has a number of affordable options to choose from. If you choose a policy with coverage of $250,000+, the company also offers discounted rates.

Factors to Consider

While we have talked about term life coverage here, it’s also important to take whole life or universal policies into consideration. These types of policies are meant to last for the duration of your life. They don’t require renewal after the end of your term. This also means your premiums cannot increase as you age or if you become ill.

However, a whole life policy is considerably more expensive than a term policy. This is because of the protections it provides, as well as the fact that it builds up a cash value over time (which you can even borrow against). If you have a special circumstance, such as a child with special needs who will need lifelong coverage, it’s definitely worth considering the increased cost in coverage.

Also, there is one more thing to consider when buying a policy that will cover your mortgage balance. Some companies offer what’s called mortgage life insurance, which has the sole purpose of paying off your mortgage loan if you pass away.

The difference between this coverage and a regular term life insurance policy is that your family will not receive any sort of payout. Instead, with a mortgage life insurance policy, the payoff will go directly to the mortgage lender.

This type of policy is a good idea if you are unable to otherwise obtain an adequate term policy–for example, if you have health issues and cannot get approved for coverage. However, since mortgage life insurance doesn’t provide any sort of financial benefits to your family (outside of paying off your mortgage balance), it may not meet all of your needs.

Final Thoughts

If you’re a homeowner and have a balance on your mortgage, a life insurance policy is a very wise idea. In the event of your death, your family will have enough to worry about. Alleviating some of these concerns with coverage that at least pays off the remaining mortgage balance will make all the difference in the world.

There are many companies to choose from, and finding the right one–and the right coverage amount–is different for each person. Be sure to consider every option and obtain a number of quotes before signing on any dotted lines.

Topics: Insurance

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