The answer to the question whether one must opt for a term life insurance cover that will take care of the mortgage payment in case of untimely death is one that has to be answered on the basis of the individual facts and circumstances.
The biggest advantage of doing so is to provide financial security to the survivors after one’s death.
If only the mortgage has to be covered, it is best to opt for a term life insurance policy where death benefit decreases as mortgage is repaid.
Over the last 5 years term life insurance rates have dropped sharply, and they are expected to drop another 3% in 2006. One of the nice things about term life insurance is that it does not cost anything to shop for a new and better contract.
Buying a new policy while rates are low allows you to lock in the same price you are currently paying or pay a cheaper rate for the remainder of your current contract. Those who recently got a policy may not save much by shopping around, but if you bought one before 1999 it may well be worth a look. Keep in mind that rates can vary by vendor and do not drop your old policy until after the new one is active.
The Chicago Tribune reports:
A term policy that in 1994 cost $1,300 will cost just $641 next year, according to AccuQuote.com, an online rate comparison service. The biggest savings will come for people who have term policies started before 1999, when rates were significantly higher. Do the math. If you didn't refinance a 1994 rate and kept paying premiums for another 20 years, you would have wasted $13,180. "It's been a remarkable drop," said Byron Udell, founder and chief executive of AccuQuote. "If you bought your policy before 1999, you should be looking at it."
