When my boyfriend and I moved into our first apartment together, life insurance didn’t cross our minds. We both had decent-paying jobs and we were splitting the rent and expenses. Our only cares were whether we needed to go grocery shopping. Or whose turn it was to clean the bathroom.
Fast-forward three years. That boyfriend became my husband. And we bought our very first house. It was only then that we thought about life insurance again. We depend on two incomes to cover our living expenses and this brand-new thing called a mortgage. So, we worried what would happen if one of us got seriously ill or died. Would we want the other person to pay the entire mortgage alone? Or worse, risk losing the house? Not a chance.
When should you get life insurance when buying a house?
In general, it’s never too soon, or too late to get life insurance. And you don’t need to own a house to get life insurance. But it’s a good idea to have life insurance in place before you move in and are responsible for paying the mortgage. That way, if you die, your life insurance can help make sure your partner or family can keep the home and avoid burdening them with debt.
What insurance do you need to buy a house?
Of course, you’ll need homeowners’ insurance to cover things like fire, theft, etc. But you’ll also want life insurance to protect your mortgage and family. .
There are three types of life insurance to choose from:
Learn more: What is life insurance? What kind do you need?
Another type of coverage to consider is mortgage protection insurance. This combines two types of insurance to protect you and your family:
- term life insurance and
- critical illness insurance.
Are you curious how the combination of these insurance products differs from a bank’s mortgage insurance? Here’s the quick answer:
- Mortgage insurance covers only your outstanding mortgage balance. And, that money goes directly to the bank or mortgage lender, not a beneficiary.
- Mortgage protection (with life and critical illness insurance) provides a lump sum to use how you or your family wishes. This can help pay for the mortgage, cover debts, pay for childcare, and more.
Learn more: What is mortgage protection insurance?
What type of life insurance did we buy for our mortgage?
We decided on a life insurance policy that would pay the surviving spouse a tax-free lump sum – enough to pay off the balance of our mortgage. It’s a tough conversation to have, but a necessary decision that’s part of growing up.
Over the years, we’ve switched careers, started new businesses, and leaned on each other during times of career transition. And honestly, there were times when we relied on one another’s income to get by.
Having life insurance during these uncertain periods of our lives was reassuring. I knew that our coverage would help take care of my significant other no matter what. The house and our mortgage would be the last thing we’d have to worry about if tragedy strikes. And as our life changes, we’ll evaluate whether we need more or different coverage.
Now, you may have some sort of group life insurance through your employer as part of your benefits package. But this benefit ends if you leave the company. For myself, I see it as bonus. My workplace insurance isn’t the main insurance policy that I personally rely on.
How can you choose the right insurance coverage?
When we first started the homebuying process, all the steps in buying a new house overwhelmed me. So, life insurance wasn’t top of mind. But it’s best to prioritize getting the right coverage. To help, I recommend:
- learning more about the different types of insurance and
- discussing your options with an advisor.
An advisor can help you sort through all your options. Then, figure out what’s right for you and your loved ones.
Need help with protecting your mortgage and family?
Get Mortgage Protection Insurance
This article is meant to provide general information only. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.