Mortgage Protection Through Life Insurance: How Life Insurance May Help Your Loved Ones Keep Their Home

A life insurance policy may help provide financial protection for loved ones after the unexpected loss of the household's wage earner(s). That is why having the right coverage is essential. 

In this article, we'll address the ways you may be able to help protect your family's home with the right life insurance policy.

Life Insurance and Your Mortgage

A life insurance policy can help pay off your home’s mortgage if you were to pass away. It’s one of many ways that life insurance may help protect your loved ones and their financial future.

One of the best ways to factor your mortgage into your life insurance need is to talk with your insurance agent. They can work with you to determine the policy and coverage that can best fit your needs and help your family stay current on mortgage payments if you were to pass away.

Life Insurance Options for Mortgage Protection

Instead of a one-size-fits-all life insurance policy, American Family Life Insurance Company offers policies that can be designed specifically to meet your family’s needs. Here are some of your options:

Term Life Insurance Policies

A term life insurance policy is active for a specific amount of time and typically offers a larger amount of coverage at a lower price than a permanent policy. This type of policy doesn’t accumulate cash value and only pays out if the insured passes away while the policy is in effect.

If your specific goal is to make sure your family will be able to pay off your mortgage if you pass away, a term life insurance policy might be for you. And don’t worry — even if you change your mind down the road and want to convert your term policy into a permanent policy, like a whole life policy such as DreamSecure Whole Life Insurance, you may be able to do that (subject to policy provisions). We know your life insurance needs can change over time, and we’re always here to help you meet them.

Whole Life Insurance Policies

A whole life insurance policy is just what it sounds like. Rather than only covering a set number of years, it can cover you for your entire life. It also has living benefits, such as cash value accumulation.*

American Family Life Insurance Company offers different life insurance policies. Talk to your agent about customizing a policy or a combination of policies today and getting the peace of mind you deserve.

Flexible Life Insurance Policies

If you value flexibility, flexible life insurance makes sense. This type of life insurance gives you the flexibility to adjust your policy as your life evolves.** A flexible life insurance policy also allows you to build cash value.*

Review Your Life Insurance Coverage

If you have a life insurance policy already and think you’re all set, consider this — if you’re not in the exact same family, employment or living situation that you were in when you got your policy, your needs may have changed. Schedule a personal insurance review with your agent on a regular basis and they’ll help you perform a needs analysis. Your agent is a great resource to answer your questions. They may also be able to help you find gaps in your life insurance coverage or new ways to save on your other insurance policies.***

Frequently Asked Mortgage and Life Insurance Questions

Is life insurance important if I have a mortgage?

Yes. A life insurance beneficiary can choose to use the death benefit for anything. It’s a great way to help safeguard the financial future of your family if you were to pass away.

How can life insurance be used for a mortgage?

For many, it may take many years to pay off a home mortgage. Life insurance is one way of aiding your family in paying off a mortgage if you were to pass away before the mortgage is completely repaid.

Is life insurance mandatory?

No. Life insurance is not mandatory, but it can be an essential part of helping make sure your loved ones are financially protected. Life insurance proceeds may be used to help pay off a mortgage, but it is not the same as mortgage insurance that you might be required to have as a condition of a loan.

Help Financially Protect Your Loved Ones Today

Your home is worth protecting — that’s why you have homeowners insurance in the first place. Life insurance may help ensure your house stays in your family by providing a death benefit that may help pay down a mortgage or make important purchases if you were to pass away. Contact your American Family Insurance agent to discuss which life insurance policy best fits your needs.

This is a brief description of coverage and is subject to policy and/or rider terms and conditions, which may vary by state. Fixed and guaranteed premiums are statements about the policy as determined at issue, and any changes made to a policy may affect the premium and are subject to our underwriting rules. The words lifetime, lifelong and permanent are subject to policy terms and conditions.

*Any loans taken from your life insurance policy will accrue interest. Any outstanding loan balance (loan plus interest) will be deducted from the death benefit at the time of claim or from the cash value at the time of surrender. If the loan balance grows too large for the cash value to support it, the policy could terminate.

**Subject to policy terms and conditions.

*** Discounts may vary by state and company underwriting the auto or homeowners policy. Discounts may not apply to all coverages on an auto or homeowners policy. Discounts do not apply to the life policy.

Policy Forms: ICC18-33 (10), ICC18-33 (15), ICC18-34 (20), ICC18-35 (30), L-33 (10)(ND), L-33 (15)(ND), L-34 (20)(ND), L-35 (30)(ND), L-33 (10)(SD), L-33 (15)(SD), L-34 (20)(SD), L-35 (30)(SD), ICC18-36 (10), ICC18-36 (15), ICC18-36 (20), ICC18-36 (30), L-36 (10)(ND), L-36 (15)(ND), L-36 (20)(ND), L-36 (30)(ND), L-36 (10)(SD), L-36 (15)(SD), L-36 (20)(SD), L-36 (30)(SD), ICC17-225 WL, L-225 (ND) WL, L-225 WL, ICC17-227 WL, L-227 (ND) WL, L-227 WL, ICC17-223 WL, L-223 (ND) WL, L-223 WL, ICC17-224 WL, L-224 (ND) WL, L-224 WL, ICC17-228 WL, L-228 (ND) WL, L-228 WL, ICC21, L141, MS 01 22, L141, ND 02 22, L141, SD 02 22