Something to Think About

When I hear about disasters, like the one in Toronto with the Air France flight that slid off a runway, I start to thinking about how we protect ourselves. Life is a bit of a crap shoot. What can we do to ensure that our welfare is taken care of? And perhaps even more importantly, how do we ensure our family's welfare? One of the things that comes to mind is life insurance.

Now, what would life insurance have to do with your mortgage or your finances? Well, it shouldn't have anything to do with them, unless you die suddenly and leave your family without a critical source of income -- you. In that case, life insurance can mean a world of difference for your loved ones.

Particularly if you are the main breadwinner, you should leave your family debt free if you suddenly pass away. That's at a minimum. And your biggest debt is? You guessed it. Your mortgage.

I know this one from experience. When my father suddenly passed away, my mother discovered that his benefits were paltry. The life insurance he had purchased through work didn't kick in if he died before age 55; he was only 48. He didn't qualify for pension benefits; again, he'd selected a policy which required him to live until 55. Suddenly, not only had she lost her husband, but she was thrust into the role of breadwinner from one moment to the next. My mother was left a widow at 42. What saved her from a desperate financial situation? Mom and Dad had put life insurance on the mortgage when it was offered by the bank. When he died, the mortgage was paid out. Having that house paid off made all the difference in my mother's ability to support a family after my father's untimely death.

While my parents had life insurance through their bank, it was pretty expensive as life insurance goes. Most banks charge a much higher premium for life insurance on your mortgage than an insurance company will, and you keep paying that high premium even as your mortgage balance (and pay out) is falling. A better idea? Get a life insurance policy from a life insurance company, where you can easily shop around and compare quotes.

In most cases, if you don't already have life insurance, you should consider term insurance. That way, as your needs for insurance decrease, you can decrease your insurance coverage. In the long run, you'll likely save money over the cost of a whole life policy.

So, here's what I'm getting at. Disasters happen. While no one died in Toronto on the ill-fated Air France flight, many could have. Where would their families be now if they were gone? A better question: where would your family be now if YOU were gone?

If you do nothing else, get life insurance to cover your mortgage. Get it from the bank; get it from a life insurance company. Get it now -- while the skies are blue and there's no sign of trouble.

Michael

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