When Should You Buy Mortgage Protection Insurance?

Many homeowners wonder whether they should purchase mortgage protection insurance immediately after buying a home or wait until their finances feel more settled.

There is no single deadline that applies to everyone. However, certain life events can signal that it is time to review your coverage needs.

In general, it is helpful to explore protection before a financial emergency occurs. Age, health and eligibility can change over time. Therefore, waiting may affect the options available later.

After purchasing a new home

Buying a home is one of the most common reasons to consider mortgage protection insurance.

A new mortgage may be the household's largest financial obligation. Additionally, the family may have used a significant portion of its savings for the down payment, closing costs, repairs and moving expenses.

If one homeowner passed away shortly after the purchase, the surviving family could face a large loan with reduced income. Because of this, many homeowners review coverage for new homeowners during or shortly after the home-buying process.

After refinancing the mortgage

Refinancing can change the mortgage balance, monthly payment or repayment period.

For example, a homeowner may refinance into a new 30-year loan after already making payments for several years. As a result, existing life insurance may expire before the new mortgage ends.

After refinancing, review:

• The new mortgage balance
• The new repayment term
• Monthly payment changes
• Existing policy expiration dates
• Current beneficiaries
• Household income needs

Therefore, refinancing is a practical time to reassess coverage.

When your family grows

Marriage, childbirth, adoption and other family changes can increase the number of people depending on your income.

A policy selected when you were single may no longer be enough after purchasing a home and starting a family.

In addition to the mortgage, the household may now need to consider childcare, education, healthcare and income replacement.

Furthermore, a stay-at-home parent can create significant financial value even without a traditional salary. Replacing childcare and household responsibilities could be expensive.

When household income changes

A promotion or salary increase may allow a family to purchase a larger home or take on additional financial commitments.

On the other hand, a household may become more dependent on one person's income if a spouse stops working or reduces working hours. Both situations can justify a coverage review.

Mortgage protection should reflect the family's current financial structure rather than the circumstances that existed several years ago.

When existing coverage is no longer enough

Some homeowners rely on life insurance provided through work. Employer coverage can be helpful. However, it may be limited or dependent on continued employment.

Additionally, the benefit may not fully cover the mortgage and other family needs. Review your existing policy when:

• You change employers
• Employer benefits decrease
• A personal policy approaches expiration
• The mortgage balance increases
• Debts increase
• Your family responsibilities change

As a result, you can identify possible coverage gaps before they become urgent. Our guide on how much coverage you need can help you size the gap.

Does buying earlier matter?

Life insurance premiums are generally influenced by age and health. Therefore, applying while younger and healthier may provide access to more options or lower rates than applying later.

However, this does not mean older homeowners should assume they cannot qualify. Insurance carriers use different underwriting guidelines, and available options can vary, including no-medical-exam applications.

The best time to review coverage is usually when you recognize a need. Delaying the review does not make the financial responsibility disappear.

Should you wait until after closing?

Some buyers begin reviewing coverage before closing, while others wait until the mortgage details are final.

You may not need to wait until closing to begin learning about available policies. Nevertheless, confirming the final loan balance and term can help you select an appropriate coverage amount.

A licensed insurance professional can help explain how the timing may affect the application.

Review coverage regularly

Purchasing a policy is not the final step. Homeowners should review coverage periodically, especially after major life changes.

Consider reviewing it every one to two years or after:

• Marriage or divorce
• A new child
• A home purchase
• Refinancing
• A career change
• A major health change
• A significant debt increase
• A policy expiration

Ultimately, the goal is to keep the coverage aligned with the household's current needs.

Explore mortgage protection today

Kersey Financial Group helps homeowners compare mortgage protection options based on their mortgage, family and budget. Request a free quote or see if you may qualify.