What Happens To My Mortgage Protection Insurance If I Sell My House?
When you purchase a home, you are likely to get offers for mortgage protection insurance, a type of life insurance that will pay off your mortgage in case you die or become disabled. This provides protection for your family if you are no longer there or no longer able to work to pay the mortgage. If you die, with some policies, the proceeds go directly to your lender to pay off the balance on your mortgage in full. Your family will still have a place to live, provided they can pay the insurance and taxes on your home.
However, most mortgage protection insurance policies today are designed to pay out the full amount of your original mortgage, regardless of the outstanding balance. With this type of policy, in the case of your death, your mortgage would be paid off, and your beneficiaries would get the remainder.
But what if you buy mortgage protection insurance at the time you purchase your home, then later decide to sell the home? What happens to your mortgage protection insurance policy?
Benefits Decrease With Some Mortgage Protection Insurance
Some mortgage protection insurance policies have decreasing benefits. The payout decreases as the balance on your mortgage decreases, although your payments remain the same. If you were to die while you still owned the home, the payout would equal the balance on your mortgage, whether you had been paying on it for two years or twenty years, and all of the benefits would go directly to your lender.
However, with a mortgage protection insurance policy designed to pay out the full amount of your original mortgage, the portion of the payout your family gets to keep will decrease as you pay down the mortgage. The remaining balance can be spent on anything your beneficiaries choose.
When You Sell Your Home, You Pay Off Your Mortgage Early
If you decided to sell your home, for instance, to move to another city, your lender would be paid off first from the proceeds of the sale, bringing your balance on the mortgage down to zero. When you have mortgage protection insurance and pay off your mortgage early, you can keep the coverage until the term of your policy expires. Some insurers will allow you to convert your mortgage protection insurance into a life insurance policy.
Pros & Cons Of Mortgage Protection Insurance
There are advantages and disadvantages to purchasing mortgage protection insurance. Our friendly agent will be happy to go over your options with you.
The number one advantage of this type of insurance is that your mortgage is covered in full in case you die or become disabled or lose your job. If you are injured, or become seriously ill, or get laid off, your policy may continue to cover your mortgage payments until you are back on your feet financially. Also, there is usually no medical exam required to purchase this type of insurance.
One disadvantage is that your death benefit with mortgage protection insurance is likely to be capped at your original mortgage amount. Term life insurance and whole life insurance are both alternatives to mortgage protection insurance. Both types of policies offer better death benefits. Term life insurance is available at lower rates, and whole life insurance has a cash value.
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Cargo Insurance Vs. Wholesalers & Distributors Insurance
Cargo insurance is not the same thing as wholesalers and distributors insurance. If your business is a wholesaler or distributor that ships cargo, you may need both types of insurance. Our experienced agent can review your business policies with you to help ensure you have the coverage you need at the best price for you.
What Is Cargo Insurance?
Cargo insurance provides protection against risks of damage or loss to freight from any external cause during shipping by land, sea, or air. It is an effective way to cover your customers and your business for damage or loss to goods in transit. Cargo insurance also adds value to help you stand out among the competition.
Types Of Coverage Under Cargo Insurance
A cargo insurance policy can provide coverage for transit in water, air, road, rail, registered post parcel, and courier. Coverage under a cargo insurance policy may include:
- All risk coverage: This provides extensive protection against damage or loss caused by external factors, including cargo abandonment, pest infestation, customs rejection, employee dishonesty, and damage due to improper packing.
- General average coverage: This coverage is a basic requirement for marine cargo transit and covers only partial loss to the shipment. Under general average coverage, all other cargo holding owners on the ship are required to pay compensation to the owner of the periled cargo.
- Free from particular average coverage: This clause excludes coverage of partial losses to the cargo or hull except for losses resulting from sinking, burning, collision, or stranding. The shipper is only liable in cases of significant losses to cargo and does not pay for minor losses.
- Warehouse to warehouse coverage: This coverage is applicable when cargo is unloaded from a ship and transported to the customer’s warehouse.
What Is Wholesalers & Distributors Insurance?
Wholesalers and distributors insurance is business insurance for wholesalers and distributors. Most such companies have a business owners policy that protects the business in much the same way as homeowners insurance protects your home and personal possessions. The typical wholesalers and distributors business insurance package includes at least the following three basic coverages.
Commercial Property Insurance
This coverage helps protect the premises where wholesalers and distributors do business, such as a warehouse or distribution center. It also protects equipment, shelving, etc., whether it is owned or leased.
General Liability Insurance
General liability coverage helps protect wholesalers and distributors from lawsuits in which it is alleged that bodily injury or property damage to another occurred as a result of business operations. For example, it would cover your business if an employee caused damage to a customer’s property while delivering a shipment of goods. It may also cover certain claims of libel and slander.
Business Income Coverage
Business income coverage protects your business against loss of income in case normal operations are interrupted due to a physical loss at the covered premises. In this context, business income is considered to be net profit or loss before taxes that would have been earned or incurred by the insured, plus continuing normal operating expenses, including payroll.
What Does My Renters Insurance Cover?
If you are renting a home or apartment, it is important to have renters insurance. Although there is no legal requirement that you carry renters insurance, it may be required by your landlord under the terms of your lease. It helps protect both you and your landlord by ensuring that, if something happens on the premises, either the landlord’s insurance or your renters insurance will cover it.
Your landlord’s insurance will not cover damage to or loss of your personal possessions – only damage to the building. If a visitor to your rented home is injured on the property, that person could file a premises liability claim against you, your landlord, or both. In this case, your landlord’s insurance policy will only provide liability coverage for your landlord.
What Types Of Protection Does Renters Insurance Provide?
Renters insurance can help protect you in three important ways:
- It can help replace your belongings if they are damaged or lost as a result of fire, theft, or vandalism.
- It can cover the cost of repairs or medical bills if you accidentally damage something or someone gets hurt on the property.
- It can cover your hotel and meals if it is not safe to live at home while damage to the property is being repaired.
Coverage For Your Property Under Renters Insurance
In case of a fire, you can file a claim under your renters insurance policy, pay the deductible, and receive compensation for the costs of your loss, up to the policy limits. This includes smoke and fire damage to your belongings in the rented property.
If your rented home is burglarized, your possessions are covered under your renters insurance policy. Typically, this coverage will extend to items stolen from your car while you are traveling. However, this type of policy will not cover damage to your car itself. That would be covered under comprehensive auto insurance.
Liability Coverage Under Renters Insurance
If you are sued or a claim is made against you because of a covered occurrence, your renters insurance can help pay your legal expenses and related damages. For example, if a visitor to your rented home trips and falls on a moveable object that belongs to you and breaks a leg, your renters insurance should provide protection. Most rental insurance policies provide a minimum of $100,000 in financial protection against covered liability claims for damage to property or bodily injury that:
- Occurred inside your rented home
- Was caused by your personal activities
- Was caused by your children or pets
Medical payments to others coverage in a renters insurance policy generally pays up to $1,000 per person for necessary medical expenses, regardless of legal responsibility, when an accident in your home causes bodily injury to others. It can also provide coverage in other situations, and higher amounts of coverage are available.
Where Can You Get Renters Insurance?
The most common way to buy renters insurance is through an insurance agent. Our friendly agent can help you find the best quote on the right renters insurance policy to suit your needs.
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How Do I Change My Life Insurance Beneficiary?
It is crucial to name a beneficiary on your life insurance policy. Otherwise, when you die, the policy becomes part of your estate and subject to probate. However, you may change your mind about who you want your beneficiary to be, in which case you have the right to change it.
What Is The Process For Changing Beneficiaries On A Life Insurance Policy?
In most cases, it is a simple matter to change the beneficiary on a life insurance policy. You simply need to contact your insurer and request a change of beneficiary form and fill out the form accurately and completely. Make sure to spell out the complete names of all your beneficiaries and provide their Social Security numbers to facilitate payout of benefits in the event of your death. If you name more than one beneficiary, be sure to designate how you want the death benefits distributed. If you would like professional help, our friendly agent will be happy to assist you with the process.
Naming Primary, Secondary, & Final Beneficiaries
Consider naming three tiers of beneficiaries – primary, secondary, and final. If you do so and your primary beneficiary dies before you, or at the same time in the same accident, your death benefits will go to your secondary beneficiary. If that person is no longer alive at the time of your death, the money from your life insurance policy will go to your final beneficiary.
Children Cannot Be Paid Death Benefits Directly
Please note that life insurance companies will not pay benefits directly to children. If you wish to name a child under the age of 18 as a beneficiary, you will need to set up a trust or make other legal provisions for how the funds are to be managed. In naming your beneficiaries, you should also be aware that someone receiving Supplemental Security Income or Medicaid could become ineligible for this assistance with a large payout from your life insurance policy.
Are There Any Tax Consequences For Changing Beneficiaries?
Although beneficiaries are not required to pay income tax on life insurance proceeds, in certain circumstances, the payout can be treated as part of the estate. Many people who have life insurance are both the policyholder (owner) and the insured. If this is the case, changing beneficiaries will have no tax consequences. However, if you are the owner of the policy, the death benefit may be considered part of your estate for the purposes of calculating its taxable value. As of 2019, per the IRS, estate tax is only required to be paid on estates valued at $11,400,000 or higher.
Your Spouse Has Rights To Your Life Insurance Proceeds In A Community Property State
If you live in a community property state, things could get tricky if you name someone other than your spouse as beneficiary on your life insurance policy. Your spouse would have to waive the right to the proceeds, even if you named someone else as the beneficiary. If you need more information on this issue, our agent will be happy to help.
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How Business Owners Package (BOP) Insurance Can Save You Money
Business owners package (BOP) insurance gives you several different insurance products rolled into one. Eligibility for this type of package can vary among providers. Purchasing BOP insurance can save your business money, as it is typically sold at a premium less than the total cost of individual coverages.
What Does Business Owners Package Insurance Cover?
BOP insurance can be individually-tailored to suit your business. Our knowledgeable agent can help you design a package that provides the coverage you need at the best available rates. The typical business owners insurance package protects the business owner against peril, property damage, liability, and business interruption.
Business Property Insurance In A BOP
Property insurance coverage included in BOP insurance is generally available as named-peril coverage. This covers damage to your business property caused by specifically listed events in the policy – usually including fire, explosions, smoke damage, vandalism, and wind damage. “All risk” coverage, to protect against any peril, may be available with some BOPs.
Properties covered under business owners package insurance typically include owned or rented buildings, additions, additions in progress, and outdoor fixtures. A BOP usually covers any items owned by your business or items owned by a third party temporarily in the control or custody of the business or business owner. To be covered, the property is usually required to be kept within qualifying proximity to the business premises (for example, within 100 feet).
BOP Business Liability Coverage
BOPs often provide coverage to protect the business and its owners against legal responsibility for damages caused to others. The damage must result from actions taken in the normal course of business operations that may cause bodily injury or property damage to others. This type of damage can occur as a result of defective products, faulty installations, or errors in services that are provided.
Business Interruption Coverage In Business Owners Package Insurance
When business interruption insurance is included in a BOP, the insurance company covers loss of business income caused by a fire or other disaster that disrupts or interrupts normal business operations. This insurance may also cover additional costs incurred with the necessity of operating out of a temporary location after such an event.
Special Coverage In A BOP Insurance Policy
Depending on the individual situation of your business, you may want to include additional coverage in your business owners package insurance policy. Although available limits may be relatively low, options for these add-ons may include:
- Crime insurance
- Flood insurance
- Vehicle coverage
- Spoilage of merchandise coverage
- Computer equipment coverage
- Mechanical breakdown coverage
- Forgery coverage
- Fidelity bonds
Cost Savings With BOP Insurance
Cost savings with business owner’s package insurance is simple. As with your personal homeowners and auto insurance, when you bundle business insurance policies together, it costs less than buying them separately. However, insurance companies may have certain requirements for a business to qualify for BOP insurance. For example, some insurers may only cover your business if all business takes place on your business premises. Insurance companies may have limitations as to the area of the primary business property. Typically, office-based businesses, retail stores, small restaurants, and apartment buildings qualify for business owners package insurance.
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