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How Can I Safeguard My Investment?

New York Life can help alleviate some of the worry that comes with home ownership. There's always the concern that your loved ones will face difficulties paying off the mortgage in the event that you become disabled* and cannot work, or suddenly die. (* Disability insurance products available through one or more carriers not affiliated with New York Life, dependent on carrier authorization and product availability in your state or locality.)

This is why many mortgage contracts include a clause that states, "At the death of any signer, the contract is subject to renegotiation..." The loss of an income can lead to foreclosure. That's why a number of banks and mortgage companies encourage homeowners to purchase mortgage insurance, especially if your down payment is less than 20% of the home's price.

Basically, you have two options to help safeguard your mortgage: mortgage protection insurance (PMI) and personally-owned life insurance.

PMI vs. Personally-Owned Life Insurance
PMI is a certain type of insurance policy from a bank or mortgage company in which you pay a fixed premium for a certain number of years to cover the risk of foreclosure. Should something happen to you while the policy is in effect, the insurance pays the remaining mortgage. The loan typically lasts for the life of the mortgage. As you pay off your mortgage, your end benefit goes down, too. At the end of the policy, the benefit is zero.

Personally-owned life insurance offers a different option. Essentially you pay the premiums, and your loved ones get the money — and the right to decide what to do with it.

Also, personally-owned life insurance is portable. This means if you move in a few years, you won't have to replace your insurance. This can save you a great deal of money since insurance rates usually increase as you get older.

New York Life offers a variety of insurance products that can help ensure your family's financial security — even after you've gone. Types of life insurance that can be used for Mortgage protection include permanent life insurance, term life insurance, or a combination of permanent and term. If purchased in an adequate amount, the death benefit can be used to help retire the mortgage as well as help your loved ones solve other financial concerns, in the event of your death. 

  • Did You Know...?
    Unless you have a 20% down payment, most lenders require mortgage insurance.

This material is for informational purposes only. Neither New York Life nor its agents provide tax, legal, or accounting advice. Please consult your own tax, legal or accounting professional before making any decisions.

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How Can I Safeguard My Investment?

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