Death of a Borrower

sad-woman

This is part 3 of 4 of a series called “The most important things consumers can benefit from my 15 years as a mortgage expert”

This topic is so important my brother and I just got off the phone about it.  What is your answer to the question, “how will your spouse make the mortgage payment in the event you unexpectedly pass away?”  This should be an easy answer.

Over the years, two of my clients have called for help in making their mortgage payment due to the unexpected death of their spouse.  During a tragic event, such as an unexpected death, the mortgage payment should be the last thing someone should be concerned about.  Each day 2600 Americans expect to be alive tomorrow, but will not be.

Every client has heard me ask a version of that question.  Those words have been spoken tens of thousands of times because the goal is for homeowners to seriously take the advice into consideration.

Borrowers who have a home loan should plan on to immediately purchasing an inexpensive, term life insurance policy for an amount equal to or greater than the balance on their mortgage.  Just ask yourself a few questions to help imagine if your spouse’s income suddenly vanished…

  • Where would the funds come to pay the very first mortgage payment after the funeral?
  • What family member would you have to ask for money from because you were short funds?
  • How little time would you have to grieve over the loss of your loved one because you had to earn a living?
  • What changes to your life would occur because your spouse wasn’t there to take care of household and family duties?
  • How confident are you that your children would be able to continue to live a normal life in your home after a death?

This list of questions can go on and on.  There are so many other reasons to pay for life insurance and skip one trip to Subway each month, but very few individuals take the time to buy it.  I am not an insurance agent, but maybe I should be.

Most employer’s life insurance plans do not provide enough benefit to fund the same standard of living after you pass away.  Don’t plan on your aunt to setup a “GoFundMe” site and bankroll the roof over your family’s head.  Your spouse will never stop worrying about money.  It is very unlikely that your health insurance plan has enough death benefit to handle the household expenses.

If you own a home or plan to buy one, the second thing you should do after signing the loan application is setup an appointment with a life insurance agent and buy a new policy, or update your current one.  It is not unethical to have adequate life insurance to pay off the house in the event of an unexpected death.  Adequate coverage will provide the luxury of allowing your family to take as much time to grieve over your loss, all while maintaining the stability of life’s current routines.

If you think you are going to live to 100, guess again!  The U.S. Department of Health has some interesting statistics.  Accidents are the #4 cause of death each year.  Did you know that five percent of all annual deaths, over 130,000 Americans, die unexpectedly each year and not from old age?  For every 100,000 people in America, over 1,000 individuals between the ages of 25 and 54 pass away each year.

Think about the family of someone you know who passed away recently.  How are they managing their finances today?  Will they have to sell the home, or will the children have the comfort of keeping their bedrooms and attending the same school because of some very simple and inexpensive planning.

I have a list of highly qualified, trustworthy life insurance companies and agents, feel free to email me for recommendations at craigmarkhardt@gmail.com.  Consider buying life insurance today and give the best Christmas gift available, security.

Yes, I’ll still ask every client if they have adequate life insurance for each other, great bankers should be required to do so!

3 thoughts on “Death of a Borrower

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