Do you need mortgage life insurance?

The general rule of thumb is that a healthy person doesn't need mortgage life insurance and shouldn't just buy it. However, you need to examine your current financial situation and make adjustments to protect your loved ones.

Recently, a client of mine who was about to list his home died unexpectedly. I discovered then that, not only was his widow not on title (they had married only a few months before), the ex-wife had gotten his life insurance and 401(k) as part of the divorce settlement, and there was no mortgage life insurance. In addition, he had taken out every bit of equity on the house in order to buy out his ex, so the widow was having to make the huge mortgage payments (interest-only!) on a house she couldn't sell in addition to the payments on the house she had just bought with him! The husband had been expecting to sell the first house quickly and was, he believed, in good health, so he took some chances by not getting his new wife on title, not getting mortgage insurance, and not writing a new will. In the end, he was wrong, and now his ex and siblings are suing his estate. Additionally, the amount of time needed to settle the matter in probate is likely to eat up the time allotted to the widow, so that if she does get title and sell, it'll no longer be considered a sale by the couple, so she'll only be allowed 250k in capital gains instead of 500k (which is actually how much the house has increased in value since the husband first bought it years ago). All in all, she has been hit with all of the costs and none of the benefits of marriage.

So please look at your whole financial picture and have your insurance updated to protect your loved ones because you never know.

Here are a couple of articles on mortgage life insurance and life insurance:
cnn money article on mortgage life insurance
cnn money article on life insurance