Life Insurance for Mortgages

Written by Strahan Financial Services

Life Insurance for Mortgages

Your home may be your most valuable asset. An unseen death can quickly put your home at risk. For many people, the most significant investment they will make is their home. Life insurance to cover mortgages or “mortgage protection insurance” is a smart decision to make.

Protecting your home with mortgage life insurance or regular term insurance can pay the balance of your mortgage in the event of premature death. It is easy to do today with policies that are easy, fast, and affordable to purchase.

There are many types of life insurance policies available. However, these specially designed policies protect your mortgage and your family in the event of disability or death. Often time they can be purchased without a medical exam. Your mortgage protection should specifically cover natural death and not accidental death only. For a single parent, this may be extremely important to your children’s future. If you are a non-resident, you can still purchase life insurance for your home.

Caution! Do Not Lock Your Policy in With The Lender 

In purchasing term life insurance for mortgages, be careful that the recipient of your mortgage protection policy is not the lender but your beneficiary. Do not lock the protection in with the lender.  You control the benefits if you own the policy. The death benefit could pay the medical bills and then refinance the loan leaving the surviving beneficiary in a better financial position. Also, if the lender were to sell the loan, and it happens continuously, you could lose your insurance coverage if the coverage is not transferable.

Often these policies are written at the closing of the loan can only be collected on if the insured dies of an accidental, not a natural death. Life Insurance for Parents can help find the right policy to protect your home and you with the best benefits.

So, purchasing a policy not locked in with a lender gives you control of the policy. You choose the benefit amount, the length of coverage, the individual options, and the beneficiary. You might make the beneficiary the lender in some situations. But it is usually best to choose a family member to pay off the mortgage or make payments on the mortgage with the death benefit until they are ready to sell the property.  The death benefit buys you time to sell the property if you need to sell, but when it is an excellent time to sell. Life insurance for parents with a mortgage can use the money as an emergency fund to make car payments etc. or save or reinvest the funds.

 

No Physical Examination is Usually Required

With mortgage term insurance, if you have relatively good health, you may qualify for non-medical life insurance. With non-medical or no exam life,” you do not need to take a physical exam and have blood drawn. Mortgage protection policies are typically non-medical up to $350,000 or even $500,000! They allow certain medical conditions.

 Mortgage protection insurance requires no medical exam.  Policy construction makes it easier to buy life insurance for those with reasonably good health and qualify for coverage. It eliminates much of the expenses and time involved for the insurance company to issue a policy.

Today you can get a non-medical application issued up to age 60 for a $500,000 or more if you are in good health. If you are under 45 years of age and meet the requirements, you can receive an accelerated life policy of up to $1,000,000!

If You Move Your Policy Moves with You

If you do not lock the policy in with the mortgage lender and you refinance the loan, or the mortgage is sold to another company, you do not lose your insurance.  Many mortgage policies were written when the loan closed and are usually accidental death policies.  They do not provide full protection if a death occurs due to natural causes.

The Conversion Option

These policies automatically include a conversion option, which allows you to convert your term coverage to permanent insurance, which can accumulate cash values during the initial term plan or at the end of it. You can convert all the death benefits or a part of it, and your health at the time of conversion plays no role in the process.

Mortgage life insurance is not PMI

Your lender probably required you to purchase PMI, “private mortgage insurance” if you bought a home with less than 20% down. PMI covers a portion of your loan should you default, the benefit is paid to your lender, not your family. PMI reduces the risk faced by lenders and makes it easier for you to qualify for a mortgage.   However, you need another form of Life Insurance to guarantee your loan is paid off if you suddenly die.  Mortgage Insurance is for this purpose.

Life Insurance for Mortgages Offers Special Benefit Options

With Mortgage term insurance, you can add these options with term mortgage life insurance. They will provide additional protection but make the premium more expensive.

  • Disability income rider
  • Disability of waiver of premium rider
  • Critical illness rider
  • Other insured riders
  • Coverage for children
  • Accidental death benefit
  • Terminal illness
  • Return of premium

Disability income riders pay a monthly income benefit that can help make your mortgage payments and other bills if you become disabled due to a covered sickness or accident. They can cover a disability resulting from either illness or accident or an accident only disability, which would lower the policy cost. The pay period can be adjusted depending on the company.

Disability of waiver premium riders pays the premiums if you become disabled for the life of the policy.

Critical illness pays a lump-sum benefit upon the first-ever diagnosis of a covered critical illness, such as cancer, heart attack, or stroke.  With some companies, the benefits do not decrease the death benefit; with others, it does reduce the death benefit.  If you have more than one critical illness, depending on the company, you can receive multiple payouts. You can purchase a critical illness policy that is a “stand-alone” policy not attached to a policy with added protection in case of a critical illness.

Other insured riders enable you to add someone who is not the primary insured to the policy.  It can be the spouse or someone other than the spouse. Others with insurable interest may include family, friends, significant others, or business partners.

The coverage for children provides term insurance to age 25 for each child plus the option to purchase permanent life insurance on the 25th birthday (or when the rider terminates) your children are guaranteed permanent life insurance, regardless of their health at that time. These riders cover all children in the household under one rider and are purchased in units from 10-25 in quantity each unit is $1,000 in coverage.

Accidental death benefit riders are like an accidental death life policy.  It provides an extra benefit in case the insured dies from an accident. This rider can double the death benefit of the policy if death occurs due to an accident.

Terminal illness and Accelerated benefits

Most of these plans come with either a Terminal Illness or Accelerated benefit provision built into the policy.  Terminal illness is a life expectancy of 12 months or less in some cases 24 months. You may receive up to 100% of the death benefit depending on the company that has your policy. You have your policy with Accelerated benefits that allow you to receive an advance payment of the death benefit if you are diagnosed with a terminal illness or require permanent care in a nursing facility. Accelerated benefits are not available in all states.

Get your insurance premiums back!

One of the most valuable features to consider is the Return of Premium Rider.  For an additional cost, this assures that the premiums you paid will be returned to you if you outlive the term period.  Some companies return all the premiums, and some return a percentage of the premium. The latter is usually less expensive.  With this provision, you will not feel like you have wasted money on something you didn’t use. The term period needs to be 20 years and above.

Mortgage Protection Insurance & The Return of Premium Benefit.

If you receive your money back in 20 years, that means the insurance covered you for all those years plus you receive all the money back. This insurance was free!

Jeremy and Tricia, a young couple, have just bought their first home they want to pay down the mortgage ASAP.

Jeremy and Tricia, want to be sure that if something happens to one of them, the other will be able to manage the monthly mortgage payments as well as maintenance and property taxes.

Jeremy and Tricia’s insurance representative introduces them to term life with a Return of Premium and explains that if they buy two policies and either dies, the other may be able to pay off the mortgage. If they’re living at the end of the level premium period, they might want to use the lump sum return of premium paid then to help pay down the mortgage. In the meantime, the policies build cash values in case of an emergency.

Age 30: Jeremy and Tricia decide to apply for two 20 years of $300,000 policies with the return of premium. In this example, let’s suppose that the annual premium for 20 years is $590.00 for Jeremy and $455.00 for Tricia. The monthly total for both policies would be $87.00, which is less than a cable bill.

At age 50, twenty years later, the policies reach the end of their 20-year level premium period. They convert their policies and take the cash that has accumulated over the 20 years. Jeremy’s policy would return $11,800, and Tricia’s would return $9,100. They receive back the total of what they paid into the two policies over the 20 years. So, the policy cost nothing, and they had insurance for the 20 years.  They decide to use the money to pay down their mortgage, so they will be able to own their home free and clear, sooner. Mortgage term insurance is a great vehicle to use with the return of premium rider.

Mortgage Insurance Designed for Your Situation

Mortgage insurance requires an agent experienced and skilled in working these cases. We have helped consumers purchase life insurance to cover mortgages regularly for over 15 years.  Because we offer multiple insurance providers to choose from, we can customize a plan to cover your needs with the most competitive mortgage life insurance rates in the industry.

Other companies offer overpriced one-size-fits-all policies that may not match your needs or your budget. Our specialists will help you navigate the process and secure the coverage you need that does fit your situation.

Mortgage Insurance is not about a piece of paper; it is an investment in your peace of mind and your family’s security.  Think about the possibilities for their future.  Let us help you. Fill out the information to receive a free quote.

Why Use Strahan Financial Services

Mortgage protection insurance is a valuable asset. It is essential to use an experienced independent agent. As experienced independent agents, we have extensive knowledge of the insurance industry and how to qualify you for the best possible life insurance rates with no medical exam. Many of the websites offering life insurance are call centers with cubicles of agents using a script to sell you life insurance. Some of the websites sell your information to 10 or more agents, which results in you receiving many unending calls. We are not a call center.

Our staff has extensive knowledge of the insurance industry. Strahan Financial Services is an independent brokerage. It is essential to choose the best life insurance company for your mortgage protection insurance. With 852 life insurance companies active in the U.S., we only represent the top 1% of the market place. We know the companies, the products they offer, and we use the latest technology to improve your experience and get your policy issued as fast as possible at the least expensive rate.

Give us a call, let us help, or you can even run a needs analysis, health analyzer, receive quotes, select a product and a carrier and complete a pre-application on your own!

about Strahan Financial Services

About Strahan Financial Services
About Strahan Financial Services

We work with individuals across the nation to secure the best life insurance rates.

This entry was posted in Life insurance Resources, no exam life, Parents. Bookmark the permalink.

8 Comments

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