Life insurance and your home loan

by Tom Tousignant

in Blog, Mortgages, Wealth Building

Many home owners in Charlotte are conditioned to hate whole life insurance, however, I think it deserves a second look in terms of your home ownership and mortgage strategy.

As a rule of thumb, consider a whole life policy equal to your mortgage balance. Here’s why:
1. You mortgage will always be protected.
2. You will build cash value as you also pay down your mortgage balance.
3. When you pay off your mortgage, you will still have Insurance protection, and the cash value in the policy will likely be more than the original loan was.

If you never looked at permanent Life Insurance, the Cash Value feature deserves serious consideration. Cash Value¬†grows tax free, is always available to you if you need it, and can be accessed tax free in retirement or sooner. It’s a special way to build your wealth with fantastic tax benefits. I feel the benefits of Cash Value are the main reasons for whole life over term life in this strategy. Put some of your wealth in this liquid, tax advantaged asset class while you protect your home ownership.

Why not “buy term and invest the difference”? The number one reason to ignore this advice is that most people who tried this ahead of you “bought term and spent the difference”, or they “bought term, invested then difference, and then lost it” in one of the many crashes in the past few years.

Buy term Insurance for the coverage you need now, and add in some whole life to add in permanent protection, along with the wealth creation that comes in the cash value account.

Term Life Insurance offers you no cash value, and will likely expire when you can’t afford to pay the higher rates that insurers will charge you when you are older. As time goes on, the cash value makes your whole life insurance very inexpensive, even if it costs more early on.

There are some key secrets to how you should buy life insurance in this strategy.  Watch this video, or Email me if you want to learn more. Learn more about life insurance at life happens.org

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