Insurance

The West Coast of the United States has seen one of its worst fire seasons on record. Amidst an already financially devastating pandemic, people’s homes and livelihoods have burned to the ground. This is an absolutely tragic outcome, and everyone should be prepared for disasters like these. Getting a preparation plan in place ensures that you can minimize unnecessary stress in an unimaginably difficult time. The first step is to know exactly what is going to happen to your debts when these disasters strike. So, what happens to your mortgage when your house burns down?

Rebuilding With Insurance

The first thing you will need to do is get in touch with your insurance company. Your insurance claim is going to be your primary source of restorative funds, and it is how you can most easily obtain funds for living expenses and repairs. With most mortgages, the homeowner is obligated to have homeowner’s insurance.

Getting your insurer to pay for all damages may come with some roadblocks, as your insurance provider may try to argue with you over the extent of disaster-related damage. Consider hiring a lawyer and a public appraiser in order to assist you in that part of the process.

The most probable situation in which you will find yourself is with an insurance claim given to your mortgage provider. They will set up a disbursement schedule based on a construction or repair plan, ensuring that the funds are used properly. There can also be a good deal of headbutting here, and the appraiser/lawyer tag-team should help here as well.

Insurance can also cover your belongings that were lost in the fire, as well as a hotel stay/rental costs if your home is left uninhabitable during construction. This will help you fill in the gaps left by the disaster, and assist you in continuing to pay your mortgage.

Total Loss

In the event of a total loss, you are still on the hook for your mortgage. So, if your claim is able to cover the mortgage, you’re in the clear. If you are upside-down on your home, though, you may end up having to make payments on the home even if it isn’t there. This is obviously not the most ideal circumstance, but sometimes you have no other choice.

Will Lenders Assist Me?

For the most part, yes. Lenders make more money if you are able to make your payments. So, if you need forbearance, deferment, or some other form of assistance, they may offer that help to you. You will have to be fully transparent and cooperative with them, and ensure that you have gotten everything you can from your insurance provider.

Peace of Mind

The best way to maintain your sanity in a disaster is to come into it with a plan. Make sure you have an advantageous insurance plan, that you’ve read your lender’s policies on disaster assistance, and that you have an emergency fund. These vital steps will keep you from wondering what happens to your mortgage when your house burns down.

Do you have a plan for a disaster? Have you recently had to rebuild after a fire or other severe weather? Let us know in the comments below?

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Term life insurance is the most affordable type of coverage; it comes with the lowest premiums and, sometimes, has a cash value that you can settle for prior to the end of the agreement. When you’re learning about the different types of life insurance, you’ll undoubtedly encounter term policies the most often. These are highly flexible in terms of both length, death benefits and premium costs. Before you decide to invest, here is a rundown of all the most important details about term life insurance.

Protection Lasts as Long as Your Contract

The duration of a term life insurance policy can range from a few years to several decades. Some people choose this type of plan because it is the most affordable and helps them reach certain goals, like having guaranteed coverage for debt during a loan’s lifespan or protecting children under 18. If you want to take out a loan to cover debt, then you should look at the length of your outstanding loans rather than the term of the life insurance policy itself. The best way to ensure coverage and avoid responsibility for debt falling onto your loved ones’ shoulders is to pick a policy that either covers the length of your loans or exceeds them.

There Is No Cash Value on Term Policies

If you’re interested in accruing a cash value that you can use later, then you’ll want to look for whole or universal coverage. Term coverage is chosen for its affordability and death benefit; there is no ability to take out money or settle for a term policy. Whole life insurance, on the other hand, accrues a value over time that can borrow from or exchange your coverage for later. You can look at a guide that explains a viatical settlement in order to add to your policy to receive a cash amount in the event you are diagnosed with a terminal illness. Looking up the estimated worth of your policy is easy and free with an online tool.

You Can Convert Your Policy

Most forms of term coverage have an option to become permanent after a set period of time. When this happens, your premiums will increase substantially, so you’ll have to consider whether this is feasible for your budget before you decide to convert. However, for those who wish to keep coverage while gaining access to a cash value, this is an option worth exploring with potential providers. The death benefit can either stay the same or increase based on how much more you can pay in premiums. You can choose to pay for your premiums monthly, semi-annually, quarterly or annually. Every provider has their own requirements and financing options.

You Can Get Your Money Back

If you outlive a term, then you can receive the amount of money you put into the coverage back. This typically applies to life insurance policies that last 20 years or longer; the return of premium on term life insurance varies among providers, but a quality insurer will give its customers the ability to receive a return on investment should they live beyond the agreement of their coverage. You may also decide to renew your policy or convert it to permanent at the end of your term; remember to keep your family’s projected needs in mind and update your life insurance as things change.