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I Was Shocked When I Found Out My Homeowners Policy Didn’t Cover This!

Posted by Pekin Insurance on Jan 06, 2017

When we buy a home, the bank requires us to buy homeowners insurance as a prerequisite to getting a mortgage. That homeowners policy covers a wide variety of exposures for losses that might happen to our home, but most of those perils will never happen.


Did you know that there is one peril, though, that is guaranteed to happen at some point, but that your homeowners policy specifically does NOT cover?


Your homeowners policy will cover you if you have wind or hail damage or a fire or if someone breaks into your home and steals your stuff. There’s generally coverage if your home gets hit by lightning or if the power goes out and all your foods spoils. There’s even coverage for your contents if a pipe breaks and floods your house. But there’s one peril you won’t find covered—your homeowners policy does NOT include any coverage to pay off your mortgage in the event either you or your spouse die prematurely!


While your homeowners policy covers a lot of perils, it pays nothing when someone dies. We are all going to die at some point—it may be thirty years from now or it may be next week; we don’t know—but there’s a 100% probability that it will happen. The death of a breadwinner can be devastating to a family itself, but it will be even more of a tragedy if the family is forced to move out of the family home because they can no longer pay the mortgage.


Fortunately, you can protect against such an unexpected death. An inexpensive term life policy in an amount equal to the mortgage amount can be purchased to pay off that mortgage when either spouse dies and allow the family to stay in the home. Depending on the amount owed on the home and the age of the homeowners, the cost can be extremely inexpensive—often costing less than a dinner out with the family once a month. Another option would be a whole life or universal life policy, which have the added benefit of allowing you to accumulate cash equity in the policy that could be used to pay off the mortgage up to five years early, if you choose. It does cost a little more but may be worth considering.


Whether you use term life policy or a whole life or universal life policy to cover the mortgage depends on what best fits your budget and your needs. Talk to your local Pekin Insurance professional insurance agent to find out more about how you can protect yourself against a peril your homeowners policy doesn’t cover.



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