Homeowners vs. Life Insurance: Do You Need Both?

home insurance and life insurance

Key Takeaways:

  • Home insurance and life insurance are two different types of coverage. They are not interchangeable.
  • Most people need both — life insurance to financially protect your family if you pass away unexpectedly and home insurance to cover your home from unexpected damage. 
  • New homeowners can discover how much life insurance coverage they need with our Ultimate Life Insurance Calculator. Discover how you can save up to 50% or more on a dynamic life insurance policy from Everyday Life!

Table of Contents

One of the most common questions that people have regarding insurance is whether or not they need life insurance if they already have a home insurance policy. Everyone’s life is different, and the answer to that question will depend on your individual situation.

However, most homeowners still need to buy a separate life insurance plan. That’s because home insurance and life insurance don’t do the same thing.

Home insurance and life insurance plans have different purposes, different benefits, and different coverage options. In fact, the two are almost completely unrelated. You must understand what these policies do before you purchase one or the other (or both!).

What is Homeowners Insurance?

Homeowner’s insurance is specifically designed to protect your home. It covers the costs of any accidental or unforeseeable damage to your home from storms, wind, lightning, fire, vandalism, and other hazards.

Homeowner’s insurance minimizes your personal financial liability. For example, suppose a fire destroys part of your home or a tree falls through your roof during a storm. In that case, your homeowner’s policy can help pay for the cost of repairing or replacing your home after approving your claim.

Most standard policies will cover your possessions and any outbuildings:

  • Walls, ceilings, roofs
  • Electronics
  • Clothing
  • Furniture
  • Fences
  • Sheds

It can also protect against personal liability if a visitor is injured on your property. If you find yourself involved in a lawsuit, your homeowner’s policy can cover those costs, as well. 

Keep in mind homeowners insurance doesn’t typically cover flooding or earthquakes, swimming pool damage, or expensive valuables like jewelry, or artwork. Make sure you understand what the policy does and does not insure when purchasing this type of coverage so you aren’t caught by surprise when disaster strikes.

What is Life Insurance?

A life insurance policy is designed to cover the costs of your death. Your policy can replace the value of the income and support you provided for your dependents, as well as other expenses related to your passing:

  • Mortgage
  • Debt payments
  • Tuition
  • Daycare costs
  • Funeral expenses
  • and more

There are two main types of life insurance: term life and whole life. Term life insurance policies last for a set number of years. Whole life is a type of permanent life insurance that does not expire — it protects your family whenever you pass away.

If you die and have an active life insurance policy, the company can pay a death benefit for your beneficiaries to use for whatever they need. 

Homeowners vs. Life Insurance

The policies are not the same. While homeowners insurance protects the home, life insurance protects your family, dependents, and loved ones. Here are other ways they are different:

  • Home insurance is typically paid annually; life insurance is usually paid via a monthly premium.
  • Home insurance claims can be paid out whenever damage occurs, and as such can be paid out many times as long as the house is still owned and the payments are still made; life insurance benefits are not paid out unless the policy owner passes away, and as such can only be used once.
  • Home insurance benefits can only be used to repair or replace the property; life insurance benefits can be used at the discretion of the recipients. 

Do You Need Homeowners and Life Insurance?

It depends. Many new homeowners make the mistake of assuming that because their home is insured, they don’t need life insurance. But this is likely false.

Here’s a rule of thumb: if you have a home, you need home insurance, and if you have dependents, you need life insurance.

If you’re a homeowner, but you are single, you may not need life insurance coverage, but if you have both a home and dependents — a spouse who depends on your income to pay the mortgage, or you have young children who live with you at home — then it is wise to have both types of coverage in order to guarantee the right level of protection. 

Homeowner’s insurance does not cover death — only damage to the home. If you pass away with a mortgage and dependents, but no life insurance coverage, then your dependents can be left in a tough financial situation. Without your income to help cover expenses, they could face moving, foreclosure, or intense financial hardship (or perhaps all three).

That’s why you may need home insurance and life insurance!

The Cost of Life Insurance for Homeowners

Buying a home is an extremely expensive undertaking, especially in today’s hot real estate market. Even if you realize that life insurance is something you need, you may feel like you can’t afford both home insurance and life insurance at the same time. 

Everyday Life has set out to make term life insurance logical and affordable for new homeowners. Our Ultimate Life Insurance Calculator considers your unique life circumstances to help you get exactly the right amount of life insurance coverage you need.

The best part? We’ll recommend a dynamic policy that automatically adjusts to keep up with your life stages. That way, homeowners never pay for more life insurance coverage than they need at any point over the life of their policy! 

Here’s how it works: Imagine you and your spouse have two little kids and just closed on your first home. Right now, you’ll need a lot of life insurance coverage. If anything happens to you, the burden of the mortgage debt on your family will be high, and your kids will need to be provided for until they can become financially independent.

However, in 10 years, you’ll have paid off a chunk of that mortgage, and your kids will be closer to moving out. In 10 more years, you’ll have even less mortgage debt and your kids may be living on their own. When this happens, you won’t need as much insurance because the financial burden of your death will be significantly less heavy.

It doesn’t make sense that most life insurance companies offer a single, unchanging rate of coverage and make you overpay. But Everyday Life Insurance coverage and premiums go down over time. Our smart term life plans can save homeowners 50% or more compared to typical, static term life plans, so you can spend more money on enjoying your life and your home and less money insuring it. 

Get the Right Life Insurance for Homeowners

The thing about life is that it’s fragile. Homeowners and life insurance can help you prepare for challenges and manage the risks in your life. The right policy will help you know you’re okay, even when you can’t know what tomorrow will hold.

The trouble is that insurance can be complex and confusing for many people, causing them to not have the coverage they need. But it doesn’t have to be — and Everyday Life Insurance is here to help you navigate homeowners and life insurance so you can protect yourself and your loved ones. Learn more about how our unique plans work and use our Ultimate Life Insurance Calculator to start saving today!

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