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The Next Step After You Buy a Home With Someone

Once you’ve closed on a home and you’ve gotten a mortgage, there’s one more important step to take. That’s right – even after you’ve completed a ton of paperwork and you’ve survived the stress of buying a home with someone, there’s another move that it’s a good idea to make. If you don’t already have one, a life insurance policy could be a great thing to purchase.

Find out now: How much life insurance do I need?

How Life Insurance Works

When you purchase a life insurance policy, you start making payments to a life insurance company. In exchange for your payments, the life insurance company agrees to pay your beneficiaries a lump sum in the event of your death.

Life insurance helps provide for your loved ones when you are no longer around to do so. It also provides you with incomparable peace of mind. Having it means that whoever you leave behind won’t have to suffer a major financial blow.

The Types of Life Insurance

The Next Step After You Buy a Home With Someone

Generally speaking, there are two main types of life insurance: whole life and term life policies. Term life insurance policies last for a specific period of time, ranging anywhere from 5 to 30 years. You make payments for the term and if you die during that time, a death benefit is paid out to your beneficiaries. If you outlive the policy, no death benefits are awarded and you don’t get any money back unless you opt for a return of premium policy.

Whole life insurance, on the other hand, is a permanent form of life insurance. Coverage does not expire and the death benefit is guaranteed as long as you pay your premiums. Term policies usually have lower premiums but whole life insurance policies can offer cash reserve and dividend options.

The amount your insurance policy pays out (and the cost of your premiums) depends on your insurance company’s special formula, which takes your age, gender and health into account. It’s best to choose the right policy for your circumstances so you can save money without sacrificing your insurance needs.

Related Article: What Is Return of Premium (ROP) Life Insurance?

How Much Life Insurance You Need

The Next Step After You Buy a Home With Someone

There are all sorts of expenses that come up when a person dies, including the cost of funeral arrangements. Furthermore, when you die, your unpaid debts will get deducted from your estate. Co-signers or joint holders of loans and credit cards might be held responsible for paying back what you owe.

If we’ve convinced you that you need life insurance, how much do you need? You’ll need to think about your age and marital status, your dependents, your income, your debt and your savings and investments. You don’t want to leave your family with more to pay than they can afford.

Get life insurance quotes now.

Bottom Line

Congratulations on becoming a homeowner! Now that you have a mortgage, it might be a good idea to sign up for life insurance that offers sufficient coverage for your needs.

Photo credit: ©iStock.com/Courtney Keating, ©iStock.com/baona, ©iStock.com/shironosov

Liz Smith Liz Smith is a graduate of New York University and has been passionate about helping people make better financial decisions since her college days. Liz has been writing for SmartAsset for more than four years. Her areas of expertise include retirement, credit cards and savings. She also focuses on all money issues for millennials. Liz's articles have been featured across the web, including on AOL Finance, Business Insider and WNBC. The biggest personal finance mistake she sees people making: not contributing to retirement early in their careers.
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