A home is not just a structure made up of brick and mortar, it’s a place where love is shared, and memories are made. That is why your home is so close to your heart, and the thought of losing it scares you. However, if you’ve purchased your house on a mortgage basis, then the risk of losing it continues until you’ve finally paid off the entire principal amount along with the interest payments.
Moreover, considering life’s uncertainties, a mortgaged house could mean an added financial liability for your family. It can especially leave them in distress if you are no longer there by their side.
So, to avoid this unpleasant situation for your loved ones, let us help you understand the home mortgage situation better and how you can deal with it the right way.
What is a Mortgage?
Buying a house is a costly purchase, and therefore, it is understandable why some of you choose to buy it through a mortgage loan. However, there is plenty of financial risk built in such a loan.
A mortgage is a loan taken from a bank or any other financial institution that helps you purchase a house. The twist is that this home itself secures the loan. So, in case you default on the loan, the bank is authorized to sell your home and recover its losses.
What Is the Process of Mortgage Payment?
Before getting a mortgage, you agree to specific terms and conditions which specify for how long you will be required to pay the mortgage back, how much do you need to pay each month, along with a couple of other things. At the time of signing the loan contract, you only pay a percentage of the home’s cost, which is called the down payment. The rest of the amount is required to be paid over a period which may even span decades, given the nature of the purchase.
In case you or your family fail to meet the payments in the stipulated time, then the bank can sell off your house to recoup their loss due to non-payment. The best way to keep your family secure against such circumstances is to buy a term plan.
What is Term Life Insurance?
Term insurance is a life cover that promises to provide your family with a lump sum amount in case you pass away during the term period. Moreover, since this plan does not provide any maturity benefit, therefore it is very reasonable.
You can buy any one of the three types of covers depending on your family’s needs.
1. Basic Life Cover
Under this, your family will get a one-time fixed lump sum amount, as compensation against the loss of the breadwinner. Your family, if it wants, can use this sum to pay off the mortgage money at once. This can rid them of the mortgage burden and will also keep your house secure.
2. Basic Life Cover + Monthly Income
This cover provides your family with not just a fixed death benefit, but also offers a monthly payout. The regular income received will ensure a fixed monthly flow of money for your loved ones. This will help them in meeting with their regular expenses, including your interest payments on the mortgage loan.
3. Basic Life Cover + Increasing Monthly Income
In this cover, the monthly payments your family will receive will be increasing in nature, helping them meet with the effects of inflation. Buying a term plan with this payout option can prove to be the best term plan in case your mortgage loan interests are at an adjustable rate, or a hybrid of fixed and adjustable rate both.
For this purpose, reputable insurers like Max Life Insurance offer you the flexibility to choose the payout option. Not only this, you can also choose the duration of your term plan, which may vary from a minimum of 10 years to a maximum of 50 years. Moreover, with their claim settlement ratio of 98.74%, you can be sure that your family won’t have to struggle too hard to receive the benefits in your absence.
Buy Term Plan for Your Loved Ones
So now, with greater understanding about what is term life insurance, you may also buy this for your loved ones if you have a mortgage loan. This financial support will keep your family stable, and your home safeguarded from being sold off, even after you’re no longer there. Also, by taking add-on riders like premium waiver, critical illnesses benefit and disability cover, you can extend your family’s protection furthermore.
However, take the duration and amount of interest payments into consideration before buying. Also, compare various plans to buy the best term plan for your family, and thereby, save them the additional stress of running around to receive the claim money.
So, leave your loved ones with the legacy of your home, without any stress attached.
