A Proverbs Wife

One Income Family | Who Will Pay the Mortgage When Your Husband Dies?

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One of our BIG GOALS this year is to begin paying off our mortgage. We are completely consumer debt free which means we have no credit card, department store, student loans or auto loans.

We are free or debt all but our mortgage and a small medical bill that will be paid shortly.

Not having any debt but our mortgage has been such a liberating experience. Regular monthly bills are no longer burdensome because we no longer have a huge auto loan or credit card payments hemorrhaging our finances.

This is our first home and shortly after buying it we decided that I’d be at home full time which meant we’d transition being a one income family.

That scared me a bit since I’d decided to put my career and earning potential on hold. I worried how I’d pay for this house if Germaine were to die. We need to have a plan in place and really needed to educate ourselves on How to Prepare Financially for a Loved One’s Death.

Of course we had life insurance which would allow me to still be at home for a while but with a mortgage, debt and bills I could easily see the life insurance money gone in two to three years.

Germaine wanted to make sure we would be taken care financially almost as well if he were still here providing for us, that’s when we learned about adding a decreasing benefit rider to our life insurance policy.

At the time we made the decision to add a decreasing benefit rider to our life insurance policy we already mortgage insurance. We initially thought mortgage insurance was something we paid for in case we defaulted on our loan but after investigation we learned is mortgage insurance pays the lender in the event you default, however you are still responsible for the mortgage debt.

In most cases mortgage insurance is tacked onto your mortgage when you don’t put at least a 20% down payment on your home at the time of purchase.

This is a smart move on the part of the lender but Germaine and me being the borrower had to shift the risk as well.

We wanted to make sure that our mortgage would be paid for in case of his death so we purchased and decreasing benefit rider specifically for our mortgage.

In a nutshell, here’s how it works. We bought an additional term policy in addition to our life insurance. The additional policy is designated to cover the cost of the mortgage if Germaine dies within the 20 year window.

The policy started off at the amount owed on the house but decreases every year for the next 20 years. It virtually decreases in value as the balance on the mortgage decreases.

After putting that policy in place specifically for the mortgage, I felt more at ease and better prepared to care for our family in case Germaine dies before the mortgage is paid off.

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In our family, my husband is primarily and ultimately responsible for the outcome of our finances, however we both work together to manage our money and reach our goals.

We’ve settled into our financial roles through careful prayer and consideration. We’ve identified our strengths and weaknesses and use them accordingly to strengthen the impact of our financial decisions.

I want you to succeed in your finances and have partnered with Genworth Insurance to share financial insights into things that have helped Germaine and I better manage our wealth.

I hope you will join the conversation, learn a lot and become a better steward over your finances.

What financial fears keep you up at night worrying?

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