{"id":10072,"date":"2017-02-20T02:00:56","date_gmt":"2017-02-20T07:00:56","guid":{"rendered":"http:\/\/www.zoocasa.com\/blog\/?p=10072"},"modified":"2017-02-17T11:28:49","modified_gmt":"2017-02-17T16:28:49","slug":"why-home-and-life-insurance-are-needed-when-buying-a-home","status":"publish","type":"post","link":"https:\/\/www.zoocasa.com\/blog\/why-home-and-life-insurance-are-needed-when-buying-a-home\/","title":{"rendered":"Why Home and Life Insurance are Needed When Buying a Home"},"content":{"rendered":"

The longer you\u2019re in a relationship, the more your finances become intertwined. This is especially true if you decide to buy a home together.<\/p>\n

Home insurance<\/a> protects against potential costs resulting from damage to or destruction of your property, as well as theft. Mortgage default insurance<\/a>, mandatory in Canada for down payments between 5% and 19.99%, protects the lender if you default on your payments. But to protect your family\u2019s standard of living in the event of an untimely death, including the ability to make mortgage payments and keep your home, you need life insurance<\/a>.<\/p>\n

When you\u2019re scrutinizing household expenses as a young, healthy couple, purchasing life insurance might not seem like an urgent to-do. But ask yourself this: If you or your partner dies suddenly, would the other person be able to shoulder the entire cost of the mortgage, property taxes, utility bills, and other maintenance and living expenses, on top of paying for an unexpected funeral? What about if one of you becomes critically ill or injured and are unable to work?<\/p>\n

If tragedy strikes, life insurance protects your love ones from financial upheaval by paying out a lump sum, called a death benefit, so they\u2019ll be taken care of.<\/p>\n

There are three main types of life insurance in Canada. A fourth hybrid option, called mortgage life insurance, may be offered to you by your financial institution when you buy a house. You should discuss your options with a licensed insurance advisor to make sure you have the right coverage for your needs.<\/p>\n

Term<\/h2>\n

This type of policy covers you for a specific period of time (typically between five to 30 years). With term life insurance<\/a>, your premiums are locked in for the length of your coverage, with options to automatically renew your term, or convert to permanent life insurance later, regardless of your health. It\u2019s an ideal and low-cost way to take care of temporary needs, such as providing for young children or paying off a mortgage.<\/p>\n

Permanent<\/h2>\n

As the name suggests, this type of insurance covers you for the duration of your life. It\u2019s also more complex. There are several types of permanent insurance, the main ones being whole and universal<\/a>. Generally speaking, your premiums will be higher than term insurance when you\u2019re younger, but lower when you\u2019re older. Permanent life insurance accumulates cash value over time.<\/p>\n

Guaranteed<\/h2>\n

This is typically for people who are middle-aged or older, and is used to cover final expenses. It\u2019s easier to get because some policies have no medical exam and no medical questions asked, though the amount you\u2019re insured for may be less than with other types of insurance.<\/p>\n

Mortgage Life Insurance<\/h2>\n

In the event of your death, this type of insurance will pay off or reduce the outstanding principal on your mortgage. If you have problems getting individual life insurance because of a pre-existing condition or illness, mortgage life insurance<\/a> might be a good alternative.<\/p>\n

However, there are drawbacks: as you pay down your mortgage, your coverage decreases even as your premiums stay the same. If you die, nothing gets paid to your beneficiaries\u2014the benefit goes straight to the financial institution to pay off the outstanding principal on your mortgage. It may be cheaper than other types of life insurance in the short term, but mortgage life insurance becomes more expensive over time.<\/p>\n

How much life insurance do you need?<\/h2>\n

The general rule is five to seven times your annual income, but individuals should take a financial needs analysis that factors in specifics such as:<\/p>\n

    \n
  • The balance remaining on your mortgage<\/li>\n
  • Any other loans or outstanding debt<\/li>\n
  • Your assets: stocks, real estate, and savings<\/li>\n
  • Funeral and burial expenses, plus uninsured medical costs<\/li>\n
  • The number of survivors that will require financial support<\/li>\n
  • The number of years those survivors will need financial support<\/li>\n
  • Your survivors\u2019 specific needs: child-care, education, etc.<\/li>\n<\/ul>\n

    The Bottom Line<\/h2>\n

    Everyone thinks \u201cit\u2019ll never happen to us,\u201d until it does\u2014don\u2019t wait until it\u2019s too late. If you\u2019re part of a home-owning couple, and especially if you have children, life insurance ensures the surviving partner can pay off the mortgage and keep the family home.<\/p>\n","protected":false},"excerpt":{"rendered":"

    The longer you\u2019re in a relationship, the more your finances become intertwined. This is especially true if you decide to buy a home together. Home insurance protects against potential costs resulting from damage to or destruction of your property, as well as theft. Mortgage default insurance, mandatory in Canada for down payments between 5% and […]<\/p>\n","protected":false},"author":42,"featured_media":10074,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":[],"jnews_primary_category":[],"footnotes":""},"categories":[487,468],"tags":[],"class_list":["post-10072","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-guest-posts","category-mortgages-2"],"yoast_head":"\nHome and Life Insurance are Needed When Buying a Home | Zoocasa<\/title>\n<meta name=\"description\" content=\"Home and life insurance are vital to take out when getting a mortgage, even if you're young and healthy. 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