Remember buying your first vehicle? Your first home? That student line of credit?
Chances are, when you signed those forms, you were asked, “Would you like to protect your investment with life insurance?”, and your response may have been, ”What does that mean?”.
What they’ll tell you is that if you die while you own the vehicle, house, line of credit, etc., they (the lending institution) will pay off the remaining balance on the loan. Most of us have said, “Sure, that sounds great!”, and we end up paying a monthly or biweekly amount on it.
What nobody tells us, is that this insurance is paid for by you, however it’s owned and controlled by the lending institution.
You might be thinking, “So what, Blair?”
Well, here are few things to note:
Let’s say you purchase a home and each year you’re paying down on the mortgage… Once you get to year 5 (or whenever your renewal is) your premiums for lenders insurance either stay the same (but you owe less) or they go up because you’re 5 years older. So, you’re paying on a declining balance!
Additionally, in the worst-case scenario, most lending institutions can take up to 18 months or longer to settle an estate after death. And, to add insult to injury, they will conduct post-mortem underwriting, which means they will check our health records after we’ve passed. This can be a negative because there have been several instances where lenders have not paid the balance of the loan based on this information.
Need another reason to avoid this situation? Lenders insurance is tied specifically to that loan. Meaning, if you sell that house, get a new car, etc., that insurance is done. You are then several years older, possibly less healthy, and stuck looking for insurance at a higher rate – and in the worst-case scenario, you could get declined.
So, what are our other options?
Private Owned Life Insurance! You pay for it, you own it, and you control it.
By purchasing a life insurance policy, you can say no to all future questions of, “Would you like to have life insurance on your purchase?”, thus saving you thousands throughout your lifetime, while also protecting your family.
You can move houses, get new vehicles, start new lines of credit, and so on. As long as you have enough up-front life insurance, you can protect your family from debt and replace income. Additionally, all personal medical questions are asked up front so your family never has to worry about if you will have coverage post-mortem. Plus, your estate can be settled in as little as 2 weeks in some cases, leaving your family financially secure as they try to adapt to change.
Now what? If you’re unsure what you currently have, or how to move forward, just reach out to one of us at Harbour Financial Group. It costs nothing to chat and gain information. As independent advisors, we can source multiple companies to find something that works best for you and your family.