New HomeBefore buying a home, take a moment and think about what your loved ones would do if you were no longer there. A mortgage can be a pretty expensive debt to pass on to another person. If you finance your home, like most people do, life insurance could cover your mortgage in the event of your death.

Thirty percent of families with dependent children admit that if a primary wage earner dies they'll only be able to cover expenses for a few months, according to financial services industry researcher LIMRA. Life insurance can prevent that from happening to your family.

According to the Insurance Information Institute, home buyers who buy life insurance intend for the death benefit to be used to pay off the mortage in the event that the breadwinner's death.

Term life insurance's role

Term life insurance is often a cost-effective way to meet insurance needs when purchasing a home. Term life insurance rates often have fixed premiums over a set period of time. If the insured dies during the term, the death benefit is paid to the beneficiary.

Comparing term and PMI

Term life insurance is often compared to Private Mortgage Insurance (PMI) despite the fact that they are very different forms of insurance coverage.

In fact, PMI is often a more expensive type of insurance, and something that the typical home buyer has to purchase as a condition for getting a loan. If you put less than 20 percent down on a mortgage, the lender will usually require that you have PMI. If you default on your home loan, PMI kicks in to reimburse the mortgage lender for the cost of the mortgage. PMI offers no benefits to you as the borrower.

A separate term life insurance policy, on the other hand, protects the interests of your family--just as PMI protects the interests of your mortgage lender.

Shopping for life insurance

 Home owners looking to tie insurance to the duration of their mortgage should consider policies that have level premiums, whereby the premium remains the same throughout the duration of the contract. Concentrate on the best term life insurance companies, and buy a policy with a term that matches the length of your mortgage.