Mortgage Insurance Protection

Situation:
Michelle (age 45) and Mark (age 48), a married couple of four years, have recently purchased and moved into a brand new home. Mark and Michelle are both on their second marriages and have no children to provide for. In purchasing their new home, they were able to make a 30% down payment on their new $1,800,000 home. (Put down $540,000 and still owe $1,260,000 over 20 years). With this new liability, Mark and Michelle have become concerned with what would happen if one of them were to die. They each have enough retirement funds and savings available to live independently, but not necessarily to pay the new mortgage alone. Although one option would be for the surviving spouse to move into a smaller home, they did not want to create this type of stress at the time of death.

Analysis:
Michelle and Mark are clearly concerned with providing funds to pay off their new mortgage. This is a case where Mortgage Life insurance would be the most efficient way for them to fulfill their financial needs. Since they have a 20–year mortgage, they should consider a 20–year Term Life insurance policy with a death benefit of $1,260,000. Mortgage Life insurance, or Term Life insurance is the most cost effective way for them to have the protection they want.

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