Buying your first home is an exciting milestone in life! But, it also comes with new financial responsibilities. Per the US Census Bureau, 65% Americans are homeowners in 2025.1
One of the most overlooked yet crucial steps in protecting that investment is getting life insurance as a new homeowner. Term life insurance can help ensure that your loved ones can keep the home you worked hard for, even if something unexpected happens.
Key Takeaways
- Term life insurance for new homeowners protects your home by helping make sure your family can cover the mortgage and living costs if you’re not around.
- Buying coverage early offers affordable, fixed premiums and long-term financial security.
- The right policy should match your mortgage term, replace lost income, and account for other debts.
- Avoid common mistakes like delaying coverage or underestimating your needs to keep your policy aligned with your financial goals.
Why Do New Homeowners Need Term Life Insurance?
A mortgage is often the largest debt most people will ever take on, and if something were to happen to you, that debt doesn’t disappear. A life insurance death benefit payout helps ensure your loved ones can remain in the home and maintain financial stability.
- It provides coverage that aligns with your mortgage term, ensuring your family can pay off the loan if you’re no longer there.
- It can be easy to fit into a new homeowner’s budget due to the fixed and cost-effective premiums.
- The death benefit can cover more than just the mortgage, including education or daily living costs.
- It replaces lost income, helping your family meet day-to-day expenses and maintain their lifestyle.
- It can provide financial security, ensuring your family can plan for the future without added financial strain.
- It offers emotional peace of mind, knowing your home and loved ones are protected against life’s uncertainties.
How to Get Started With Term Life Insurance as a New Homeowner
Starting your life insurance journey as a new homeowner doesn’t have to feel overwhelming. Here’s how you can do it:
- Assess your finances: Add up your mortgage balance, debts, and living expenses to decide how much coverage you need. Or, use a life insurance needs calculator like this one from LifeHappens.
- Align your term with your mortgage: Choose a policy that runs parallel to your 15-, 20-, or 30-year mortgage term for seamless protection.
- Apply online: Today, applying for life insurance is faster than ever. Life insurance companies like Ethos make it simple to get instant quotes and complete your application process online within minutes.
- Explore flexible options: Look for policies that allow you to convert to permanent coverage later as your financial goals evolve.
- Customize your plan: Add riders for accidental death, disability, or critical illness for all-round protection.
- Review coverage jointly: If you share ownership, consider joint life coverage or two complementary policies.
How Much Coverage Do New Homeowners Need?
The right life insurance coverage should be enough to pay off your mortgage and protect your family’s financial future.
As a general rule, aim for a policy that’s at least 10 times your annual income2 (although your personal need may be higher or lower). Make sure to factor in ongoing expenses like utilities, childcare, education, and other debts.
This can help ensure your loved ones can comfortably maintain their lifestyle and keep the home without financial stress in case of your sudden death.
Should You Buy Life Insurance as a New Homeowner?
Yes, purchasing life insurance when you buy a home isn’t just a smart financial move, it’s an act of protection. According to the Consumer Federation of America, 1 in 13 homeowners across the US are uninsured.3
Life insurance can help ensure that your mortgage doesn’t become a burden for your family if you’re not around. It helps pay off the mortgage, cover everyday living costs, and safeguard your loved ones’ financial stability, giving you true peace of mind.
When Should You Buy Term Life Insurance as a Homeowner?
The best time to buy term life insurance is as soon as you purchase your home or even slightly before closing. Acting early ensures protection from day one and helps you lock in lower premiums while you’re younger and healthier.
- Buy before or right after closing to align coverage with your mortgage start date.
- Consider an earlier purchase if you’re applying for a loan jointly or with dependents.
- Reassess your policy after major milestones, such as marriage, refinancing, or having children.
Common Mistakes New Homeowners Make
While buying life insurance is a smart step toward financial security, many new homeowners make avoidable mistakes that can limit their protection. Understanding these pitfalls can help you make more informed decisions.
- Delaying the purchase, which can lead to higher premiums as you get older or even loss of eligibility due to health changes.
- Underestimating coverage needs, leaving mortgages or family expenses only partially protected.
- Relying solely on employer insurance, which often provides limited coverage that ends with the job.
- Skipping policy reviews and updates, especially after refinancing or major life events.
- Choosing the cheapest policy, without considering long-term financial goals and flexibility.
“Quarterly Residential Vacancies and Homeownership, Second Quarter 2025.” US Census Bureau, July 28, 2025. https://www.census.gov/housing/hvs/current/
- Andrew Beattie. “How Much Life Insurance Should You Have.” Investopedia, Updated September 23, 2024. https://www.investopedia.com/articles/pf/06/insureneeds.asp
- Sharon Cornelissen, Douglas Heller, Michael DeLong. “Exposed: A Report on 1.6 Trillion Dollars of Uninsured American Homes.” The Consumer Federation of America, March 12, 2024. https://consumerfed.org/wp-content/uploads/2024/03/Exposed-UninsuredHomes-1.pdf
