Congratulations, you're a homeowner

The first thought that goes through your head when you buy a house is probably not life insurance. You might be wondering how you're going to make your mortgage payments or afford furniture. So maybe you think it's not the best time to discuss life insurance. Well, it may surprise you, but there may not be a better time.

You're still young, and that makes your policy as affordable as it's ever going to be. In addition, your house may be appreciating in value, which makes it even more important to protect in case something happens to you.

How can life insurance help secure the family home?

When you purchase a life insurance policy you want to be sure to carry enough to cover the mortgage. If the insured person dies, you want your family to receive enough money to be able to stay in the house without hardship. Either term or permanent life insurance can be an effective way to help provide the appropriate amount of coverage for your family's needs.

Which type of life insurance best suits your needs as a new homeowner?

The main differences between term life and permanent life insurance policies are the length of coverage for which they are purchased, the cost of the coverage and whether or not they provide a cash value.

What type of life insurance might a new homeowner consider?

Affordable term insurance is one possibility. This means you can still meet the costs of the mortgage, property tax and other homeowner expenses without having to sacrifice the protection that life insurance provides. You can purchase a term policy with a face amount equal to the value of your mortgage, so that if something happens to you, your family can have the option to rely on the insurance to pay off the mortgage.

When is permanent life insurance a good idea?

As a new homeowner, you may be able to cover your house and lock into an affordable premium for life with permanent life insurance. Your permanent life insurance premium will not increase as you become older, nor will it increase if your health deteriorates. As long as you pay your premiums and there are no loans or withdrawals against the policy's cash value, you're covered for life.

You can borrow against the cash value of your permanent policy.

You can borrow against its cash value, generally federal income tax free. Borrowing from the policy reduces the amount of its cash value and death benefit, but you can repay the borrowed amount by adjusting your premium when you're financially able to do it. It is true, however, that any unpaid loans or withdrawals will reduce the death benefit, and may have tax consequences. You should consult your tax adviser for advice regarding your particular situation.

How much insurance do you need?

Figuring out how much life insurance you need is more complicated than just providing for payment of funeral expenses and debts after you're gone. Many times, a spouse, child or other relative depends on your income for all or a portion of their support. Most insurance agents recommend a minimum of six or seven times your annual income as a target for the amount of life insurance you should own. However, only you can determine your family's future financial needs.

Like most insurance policies, our policies contain exclusions, limitations, reductions in benefits and terms for keeping them in force. A licensed financial professional can provide you with costs and complete details.

Sharon Stanley is a representative of Prudential Insurance Co. in Cape Girardeau. (334-2603)