Mortgage insurance vs life insurance?

[QueenIsabella]

Quite frankly, I could sell my house probably in a day if that's what I needed to do. I live in a home right on the water in a suburb of Charleston. Our real estate market is crazy. My house is worth easily 2.5 x what I paid for it. If something was to happen, I want to make the decision to sell this house (and I probably will due to flood insurance etc) because I want to sell, not because I have to. Again, I could afford my home, I choose (and always have) not to be house poor.

I have decided to go with with a small life insurance policy for 10 years. That way, if and when I decide to sell the house, it's my decision alone.

It's nice to know that you COULD sell the house and make out. However, I agree with you that it's best not to make any big decisions--of any kind--if you were in the unfortunate circumstance of just having lost your husband. If nothing else, the insurance will give you a cushion to make your decisions in the clear light of day.

I also disagree with the idea of "having" to have the mortgage paid off before retirement. Current mortgage rates are so low, keeping the money in other investments makes sense to me. Now, DH and I plan to have the mortgage paid off before he retires--like Birdie dog, I'd just rather not have to worry about it--but we'll likely pay it off right before. But, having a mortgage in retirement is fine, so long as you have the resources available to pay it.

 

[tvguy]

Quite frankly, I could sell my house probably in a day if that's what I needed to do. I live in a home right on the water in a suburb of Charleston. Our real estate market is crazy. My house is worth easily 2.5 x what I paid for it. If something was to happen, I want to make the decision to sell this house (and I probably will due to flood insurance etc) because I want to sell, not because I have to. Again, I could afford my home, I choose (and always have) not to be house poor.

I have decided to go with with a small life insurance policy for 10 years. That way, if and when I decide to sell the house, it's my decision alone.

Our Real Estate market here is crazy now too. Houses sell in hours. But it's a cycle, and I would not count on the cycle being the same when and if you decide to sell. Just 8 years ago here, it wasn't unusual for houses for go unsold for up to a year.

 

[Birdie dog]

Our Real Estate market here is crazy now too. Houses sell in hours. But it's a cycle, and I would not count on the cycle being the same when and if you decide to sell. Just 8 years ago here, it wasn't unusual for houses for go unsold for up to a year.

I understand that the market is crazy right now. The Charleston market is typicallyhot due to the location and perks of living here. And water views are always in demand as they’re a finite number.

 

[DLgal]

I understand that the market is crazy right now. The Charleston market is typicallyhot due to the location and perks of living here. And water views are always in demand as they’re a finite number.

You have nothing to worry about there. It's similar to where I live. There are never market slowdowns in my city, due to the fantastic school district. If you have a house here, you can sell it easily anytime.

 

[_19disnA]

There's not enough information to give you valid advice. How old is he? Why does he want to retire now? Does he have a plan for retirement--what he's going to do with his time, how bills are going to get paid? If he's retiring early, is there a pension or retirement savings to carry you through until SS kicks in? Some expenses will go down, but some, like health care, will go up, and can be substantial. Does he plan to get some manner of employment after he officially retires? Can you pay the mortgage off early, or do you have retirement income that you can make mortgage payments from?

I agree, without more financial data (which is private and I don't advise you to post here), we can only talk in general terms. Life insurance at certain points in life makes a lot of sense. A young married couple with small children and a mortgage are more likely to benefit from life insurance if something unexpected happens and typically they don't have the financial resources of someone more advanced in their years. Later in life, if you are financially secure, there is less reason to need life insurance. You also need to see how much you would pay into a life insurance policy vs. the payout potential. Life insurance companies are not charities, they are running a business to make money. Instead of buying life insurance later in life, you might be further ahead just investing that money.

Financial advisers sometime give advice that benefits them as much as it does you. That is part of the reason they might encourage you to invest your money instead of paying off a mortgage. A little common sense goes a long way. There is no guarantee markets will always go up and lot of unexpected situations can results in markets going down that no one can ever predict ahead of time. No one ever heard of covid 2 years ago, but it had a big impact on markets when this first started. While markets have mostly recovered, if you needed to sell assets when the markets were down, you would likely have lost money. The economy tends to run in cycles so in years where this a recession, the markets will go down as well. Those ups/downs become more significant later in life since there are fewer years in front of you to wait for the markets to recover before needing those funds.

If you sell your current home in a 'hot' real estate market, the price of anything you buy next will likely also be inflated, since you still need to live somewhere. While you might 'downsize' and still come out ahead, you might also be overpaying for the next home you buy.

 

[nolatravelgirl]

More about us. My husband is 61, I'm 52. He'll be retiring with both a military and state pension. His contribution to the household bills will remain about the same after retirement and he's taken a "fun job" to give him some spending money, and get him out of my hair a few days a week. We have tricare. I make more money than he does and have set myself up well for retirement so I'm not too worried about my income. I would have been bitter though if all of my fun money went towards paying a mortgage if something happened and he left me with nothing. (My retirement has enough in it to pay off the house and leave him with hundreds of thousands of dollars before the insurance through my job). So, honestly, the biggest worry I had was the 8 years left on our mortgage, and a policy that would pay it off should something unexpected happen.

Quite frankly, I could sell my house probably in a day if that's what I needed to do. I live in a home right on the water in a suburb of Charleston. Our real estate market is crazy. My house is worth easily 2.5 x what I paid for it. If something was to happen, I want to make the decision to sell this house (and I probably will due to flood insurance etc) because I want to sell, not because I have to. Again, I could afford my home, I choose (and always have) not to be house poor.

I have decided to go with with a small life insurance policy for 10 years. That way, if and when I decide to sell the house, it's my decision alone.

My biggest concern is your constant focus on "I" rather than "we" in your statements. Why aren't you two sitting down together and discussing retirement plans? Your post make it sound like you have a live in roommate rather than a spouse. You guys need to be a team. You mention that your retirement would leave him living on easy street, is there no death benefits with his military and state pensions? Does he have no other retirement accounts? You just seem very bitter and resentful that if you were to drop dead tomorrow he would be living high on the hog yet if he keels over tomorrow then you are left high and dry. Your husband is 10 years older than you, did it never occur to you that he would likely retire earlier?

 

[Birdie dog]

My biggest concern is your constant focus on "I" rather than "we" in your statements. Why aren't you two sitting down together and discussing retirement plans? Your post make it sound like you have a live in roommate rather than a spouse. You guys need to be a team. You mention that your retirement would leave him living on easy street, is there no death benefits with his military and state pensions? Does he have no other retirement accounts? You just seem very bitter and resentful that if you were to drop dead tomorrow he would be living high on the hog yet if he keels over tomorrow then you are left high and dry. Your husband is 10 years older than you, did it never occur to you that he would likely retire earlier?

Well, let's see. Not that my personal business (beyond the question of mortgage insurance vs life insurance) and the pertinent answers to following questions is any of your business. But, I knew he'd retire before I did. But I thought he could at least wait until his SS retirement age. He worked a supervisory state job that could basically be done at least 50% by phone while being paid a full time salary. He did not work physically hard as a supervisor and he was often "on call" at our house. Meanwhile, I work 50 hours a week in an ER because *I* have always wanted to do well and retire well. *I* have worked too hard for too long to worry about being house poor in my 50s even though I make a very good income. *I* absolutely let him know that I didn't agree with his early retirement "just because he was sick of his job" but it made no difference. SO, since at the end of the day, as you stated he is older than me, *I* had to protect myself in the case of something happening because *I* am the only person I will ever be comfortable financially depending on. Does that answer your question?

 

[Birdie dog]

And I'll add that if the decision hadn't been dropped on me with little warning, *I* would have put more money into our mortgage to pay it down even quicker. Because his salary was the exact same amount every pay check and my weekend contract and OT is what pays "extra" bills. But, I wasn't given time to plan for that.

 

[MinMou]

You already made the insurance decision, so I am not going to weigh in on that. I did want to point out that with 8 years left on your mortgage (I'm guessing you did a 30 year mortgage), your principal may be low enough to pay it or most of it off. I did that a few years ago - I sold a mutual fund that wasn't performing and used the balance to pay my mortgage. It changed my entire financial picture.

If that isn't an option, have you talked to your husband about what he will do once he leaves his job? Does he have a hobby that will keep him busy? Are there projects at home that will keep him busy? Maybe he can spend time doing tasks that you pay others for (Lawn care for instance) so you can bring down your monthly bills.

The big thing that many people, especially men, overlook is that without a job, they lose the daily interaction with other people and a reason to wake up and get moving every day. That would be my biggest concern. Many men die within 2 years of retiring.

I wish you both luck in navigating how to approach this new phase of living.

 

[tvguy]

If that isn't an option, have you talked to your husband about what he will do once he leaves his job? Does he have a hobby that will keep him busy? Are there projects at home that will keep him busy? Maybe he can spend time doing tasks that you pay others for (Lawn care for instance) so you can bring down your monthly bills.

The big thing that many people, especially men, overlook is that without a job, they lose the daily interaction with other people and a reason to wake up and get moving every day. That would be my biggest concern. Many men die within 2 years of retiring.

I wish you both luck in navigating how to approach this new phase of living.

I've only been retired just over two months, and nobody warned me how much work it is. I don't know how I ever found time to have a job! I understand the interaction being missed, but working from home due to the pandemic for over a year kind of buffered that. But my wife retired at the same time, so we are enjoying each other's company and doing things together.

 

[LoveSpringsteen]

I know you already bought the small policy, but I thought I would bring this up in case others may have this option. Through my employer, I purchase additional life insurance (this is on top of my separate life insurance policy and my paid-for by work life insurance policy). By me purchasing the additional life insurance at work, I'm also able to purchase a policy for my spouse (and also for my children). There are some restrictions. I think his policy amount can't be more than half of miine, but it is a very affordable option. Just something to consider.

 

[nolatravelgirl]

Well, let's see. Not that my personal business (beyond the question of mortgage insurance vs life insurance) and the pertinent answers to following questions is any of your business. But, I knew he'd retire before I did. But I thought he could at least wait until his SS retirement age. He worked a supervisory state job that could basically be done at least 50% by phone while being paid a full time salary. He did not work physically hard as a supervisor and he was often "on call" at our house. Meanwhile, I work 50 hours a week in an ER because *I* have always wanted to do well and retire well. *I* have worked too hard for too long to worry about being house poor in my 50s even though I make a very good income. *I* absolutely let him know that I didn't agree with his early retirement "just because he was sick of his job" but it made no difference. SO, since at the end of the day, as you stated he is older than me, *I* had to protect myself in the case of something happening because *I* am the only person I will ever be comfortable financially depending on. Does that answer your question?

Well don't you sounds delightful. You mention that he is still going to be contributing the same amount to the household based off a pension and side jobs. What was your plan if he would have died while still living? You would still be left holding the mortgage bag.

 

[Birdie dog]

Well don't you sounds delightful. You mention that he is still going to be contributing the same amount to the household based off a pension and side jobs. What was your plan if he would have died while still living? You would still be left holding the mortgage bag.

Never mind. My question's been answered and we're done here.

 

[RamblingMad]

The two big ones that I think about are: umbrella insurance and long term care insurance. You should look at umbrella as soon as your net worth exceeds your auto and homeowners insurance policies. And long term care you should look at no later than when you reach the age of 50.

Term life makes sense to me when you have kids and a non-working spouse. It doesn't make sense to me if your kids have moved out and your spouse works full time. This isn't the 1950s anymore. If you're going to retire, you should have enough in investments to cover your funeral.