Life insurance is an excellent tool for estate planning, especially if your family owns a home with significant meaning and value. You may want to use life insurance to ensure the home can be passed on to your loved ones unencumbered by debt.

Securing a life insurance policy to cover the remaining mortgage balance can be an important part of your legacy, helping take care of the people you love if you’re no longer there to do so yourself.

What Is PMI, and Why Might It Be Inadequate?

Your mortgage lender may have required you to carry private mortgage insurance (PMI) when you purchased the property. These payments are often bundled into your monthly mortgage amount.

The key point to understand is that PMI only pays off the remaining mortgage balance in certain covered situations. It doesn’t pay out anything toward accumulated equity or the down payment you originally made on the property.

Suppose a fire destroys the family home and you pass away in the process. A dedicated life insurance policy, sized to cover the full replacement cost of rebuilding the home, would provide far more protection than simply paying off the mortgage balance through PMI, since that alone wouldn’t cover the cost of rebuilding.

Replacing Key Household Income

Having the funds available to continue paying the monthly mortgage through life insurance proceeds can be one of the most meaningful things you do to protect your family. Ask your agent at Wenatchee Insurance Agency in Wenatchee, WA, to explain how a life insurance annuity can be structured to create a steady monthly income stream. These payments can be set up over a specific timeframe to match how long the mortgage would otherwise take to pay off.

Reach out to us at Wenatchee Insurance Agency in Wenatchee, WA, for all your life insurance needs.

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