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In This Article, I’m Going To Explain Everything You Need To Know About Mortgage Life Insurance To Help You Decide If A Mortgage Life Insurance Policy Is Right For You
Most likely you’re here today because either yourself or a loved one has recently purchased a home and you’ve been inundated by offers for so called mortgage protection life insurance plans, or perhaps your mortgage lender offered you what’s called a mortgage credit life insurance policy.
All of this makes you wonder what these plans are and if having one is a sensible decision. My goal is to answer the following questions to help you make that determination for yourself.
NOTE: Would you prefer me to present this information to you in video format? Watch the video below for the complete presentation. Enjoy!
Here’s An Overview Of Today’s Topics:
- What Is Mortgage Life Insurance?
- Case Studies
- Who Buys Mortgage Life Insurance?
- When Should You Get Mortgage Life Insurance?
- Top 7 Reasons People Buy Term Insurance
- Why Should You Get Mortgage Life Insurance?
- Stories From The Field
- How Can I Get Mortgage Protection Life Insurance?
- Burial Insurance Rates, Age 40 to 90
What is mortgage protection life insurance?
For the sake of clarification, there are primarily two different kinds of mortgage protection life insurance plans. They both operate differently and have their own pros and cons. I’m going to explain both and briefly cover the pros and cons of each to give you an idea of what type of mortgage life insurance plan might be best for your situation.
Buy Life Insurance for Burial works hard to help people like you get affordable life insurance, whether you are looking for income replacement or final expense coverage. We find the most competitively priced option available to you while ensuring we provide the best value coverage possible. Let us help by providing you with a free quote today. In 10 minutes or less you can get a quote by calling 888 626-0439. Alternatively send us a message using the box to the left side of the screen and we will be in touch soon.
1. Mortgage credit life insurance
Mortgage credit life insurance is a plan that is usually tied to the mortgage. Typically the bank will be the one to sell this plan to you when you take out a mortgage. It is designed to pay off your mortgage if you happen to die before the mortgage is paid off. These plans are not fully underwritten, so essentially they are a guaranteed issue policy.
The policy itself only lasts for as long as you owe the mortgage. There is a later period in which you can cancel the plan once the mortgage balance is 70 percent or less of the original total and it only pays off for the exact amount owed, not a penny more.
So the benefit of these plans comes into play when somebody who’s approved for a mortgage ends up having a health issue and can’t qualify for something that’s superior coverage. The cons with these plans, generally speaking, is that they are non transferable, meaning you cannot take the policy with you once you sell your home.
Also the policy decreases in size without necessarily decreasing the cost to keep it in place. And it doesn’t benefit beyond paying off the mortgage to clear the bank of the loan, which of in and of itself is a good thing, but as you’ll see later, there are other plans that offer more than one benefit like the mortgage protection life insurance program.
2. Mortgage protection life insurance
If you’ve recently purchased a home, you’ve probably seen an endless supply of letters and postcards offering you life insurance plans to cover your mortgage, to pay off final expenses, and other such concerns. It’s important to understand that just because they say mortgage protection life insurance, it doesn’t necessarily make them any different than regular life insurance.
Essentially, they’re designed to pay a death benefit to a beneficiary of your choice when you pass away within a set period of time. These plans, I believe, are multifaceted and superior to the mortgage credit life insurance policies in most circumstances.
- A mortgage protection life insurance plan can be custom tailored to the length of time you’d like it to be enforced. Whether that’s for 10 years, 20 years, 30 years, or for forever.
- You can take your mortgage protection coverage with you even if you sell your home. Again, life insurance is just life insurance. “Mortgage protection” is just a fancy term we use to describe the real motivation that leads people to purchase the policy.
- The coverage remains level and doesn’t decrease over time.
The last point is one of the biggest advantages of mortgage protection life insurance. If you purchase a 30 year term insurance policy for $500,000 and end up dying in the 29th year, even though your mortgage is almost paid off, if you have a 30 year loan, you still will get a $500,000 death benefit paid out to your beneficiary.
Even with the reduction of the mortgage over time, the good news is that the overall coverage does not actually reduce. This is an important aspect because ultimately when you purchased the mortgage protection life insurance program, you may believe you only need coverage for a short period, but many of my clients end up needing coverage for much longer than they would have guessed initially.
This is especially true for those who climb the ladder in their profession and increase their income. Because with an increase in income often comes an increase in financial obligations, which means that life insurance plays an even more important role than initially imagined.
Generally speaking, when comparing a mortgage protection life insurance program versus a mortgage credit life insurance, I believe an individual mortgage protection life insurance program is a better deal overall. If you buy from a life insurance agent instead of a broker at a bank you will have coverage that will not only take care of the mortgage, but a lot of the other financial concerns that tend to pop up after someone passes away.
Career Advancement Concerns
The reason my client reached out to me is because she had just received a significant promotion at her company and along with her increase in income she realized she also needed to increase her life insurance coverage to adequately protect her family if she passed away earlier than expected.
The potentially bad situation my client my client face was that she had a history of depression. While nothing too major, she was still concerned that because she took medications to keep her depression at bay and because she presently suffered from depression, it could cause negative issues in getting qualified for life insurance.
The good news is that working with Buy Life Insurance for Burial gave this client the opportunity to get the best priced coverage. Because we are brokers we are able to shop the most competitively priced companies out there and in turn hand those savings over to our clients.
Though you need to fill out an application to see if you qualify, most clients we work with will receive first day full coverage at a great rate. This client was able to get as much peace of mind as possible knowing that her loved ones would be protected and covered if she died unexpectedly.
A couple of years ago a couple reached out to me because they had just purchased a new home . They were facing a 30 year mortgage and were concerned about how this obligation would be covered if either of them were to pass away before the mortgage was paid off.
The only problem was that the husband had diabetes. It wasn’t serious, but he was taking insulin to regulate his blood sugar and feared this would have an impact on their coverage eligibility.
Because this couple came to Buy Life Insurance for Burial for their mortgage life insurance needs we were able to get them affordable coverage, despite the husbands health issues, and put their mind at ease for the duration of their mortgage.
Who buys a mortgage protection life insurance plan?
Generally speaking, people who buy mortgage protection life insurance programs do so because they’re ultimately concerned and love their family. They don’t want to be a burden when they die. They don’t want their family to take care of final expenses or be saddled with a large debt or a typical six figure mortgage.
Imagine if your spouse lost you suddenly. The death of a loved one is emotionally difficult, but imagine adding to that the burden of a mortgage payment and debt such as your credit cards and your car payments.
This is why we at Buy Life Insurance for Burial believe a mortgage protection plan is important. Because the true nature of a mortgage is long lasting payments that can span the greater part of a lifetime. Since homes are meaningful to people, there’s a real drive to keep that home in the family as opposed to losing it because of some unexpected circumstances.
If you’re in a position where you’ve either recently bought a home or recently refinanced your mortgage, you probably understand that this obligation could become a tremendous burden to your surviving family. Purchasing a mortgage protection life insurance plan can pay for these obligations and truly free your family from financial burden.
Stories from the field
One day early in my life insurance career I was driving to see a client in a little town outside of Chattanooga called North Ridge. A stretch of road went on for about half a mile as I slowly drove past a bunch of homes looking for a particular house.
About 10 houses down I saw a house that I figured was probably the house I was looking for. It tends to be that I encounter the strangest of circumstances just as I am running for an appointment.
This day was no different. As I drove closer I saw a pink mailbox, not something you see everyday. As I got closer I noticed there was also a 1980’s pink Cadillac in the drive.
As I parked next to the house I saw a painted picture of a 4 x 6 foot person in what could only be described as a jester looking hat with facial paint. Sure enough, this was the house I was looking for. Out came a lady from the house to unlock the fence to let me in. She was a nice older lady. Her name I found out later was Anita and her middle name was Lollipop.
Miss Anita invited me into her house in which she had a card table, two chairs, and a fan blowing. It was a hot Tennessee summer afternoon, humid and well above 90.
As we began to talk she told me about how she was one of the people that was the last to leave New Orleans during hurricane Katrina. She actually swam her way through the French Quarter on the back of a casket.
If you know anything about the cemeteries in New Orleans you know that caskets are often kept above ground, so when the water rushes in, it causes caskets to float away.
Miss Anita swam her way, casket and all, to an ipass on I-10 where she waited for FEMA to pick her up a few days later and take her to the airport. None other than Al Gore himself flew his private plane down to pick her up and fly her out to Tennessee out of harm’s way and there she remained. All of this is a true story.
The reason I share this story is not just because it seems almost too strange to be true, but because this lady had been seriously taken advantage of by a life insurance company. She was paying on a funeral arrangement plan that was costing her in excess of $250 a month for a $8,000 funeral. There were very few reasons why she needed to pay this much. Her health was generally good. She’d had some heart ailments many years prior, but was otherwise in good shape. She had no serious, chronic issues. She was of sound mind. She should have qualified for something better.
While doing some price checks I found that we could get her equivalent coverage for $1,800 less a year in combined monthly payments. She was enthralled and felt that the value was significant.
Many people who are seniors are taken advantage of by salespeople who try to make out their particular product to be better than anything that has ever been seen before and that the value of whatever is being sold is so substantial that there’s no comparison, thus justifying the inordinately high price.
The truth of the matter is that in the life insurance business there are premiums that are justified and unjustified. As I like to demonstrate in my articles, we operate what’s called a brokerage program which gives the client an advantage. We are able to shop around and find you the best pricing and coverage for what you are shopping for so that you are not relegated to paying an inordinately high price that cuts into your finances for living expenses and other related costs.
We were able to get this client a plan that not only significantly dropped her premium by $1,800 annually, but also we were able to get her first day full coverage, which in some cases has proved difficult for people with a history of heart issues like she had. While I can’t guarantee everyone first day full coverage I can say with certainty that dealing with a broker like us at Buy Life Insurance for Burial puts you in a position to potentially get better coverage than what you find through TV insurance or mail order insurance programs.
If you’re interested in finding out if you qualify call us at 888 626-0439 today for a free, no obligation quote.
We are here to provide you with expert advice and to answer any questions you might have. You can also get in touch by sending us a message using the message box found on this page. We will respond within one business day.
When should you buy mortgage protection life insurance?
The way I explain it to my clients is that the best time to buy mortgage protection life insurance coverage is right at the point or soon after the point in which they realize that life insurance is an important purchase to make.
One of the interesting characteristics about life insurance is that you don’t actually benefit from it while you are alive. It’s something you pay for but never get to enjoy yourself. Though it may give you peace of mind, it’s still an unusual purchase when you think about how when you buy most things, you get to enjoy them immediately.
The reason I mentioned this is that once you recognized that there’s an immediate need for coverage and you’ve identified that your mortgage would be a tremendous burden on your family, you are more likely to be confident in your purchase of a life insurance plan. You realize that it’s important to take care of final expenses and you love your family enough to take the actions necessary to be responsible for their welfare if you happen to pass away earlier than expected.
If this sense of urgency and need is not felt, people tend to procrastinate and put off getting coverage. I’ve been in the business since 2011 and I’ve seen all sorts of people who would tell me how important it was to purchase life insurance, but sadly they put the decision off for many years and then found themselves in a position where their health had declined and they couldn’t qualify for coverage.
Top 7 Reasons People Buy Term Insurance
1.Term insurance is affordable
Many people purchase term insurance because they are on a restrictive budget but also understand the merit of having life insurance in the first place. When compared to other types of life insurance products such as whole life insurance or universal life insurance, term life insurance is immediately recognized as the cheapest choice among the options available. Term insurance allows people to get affordable, quality life insurance in place to protect the people they love without breaking the bank.
The primary reason why people buy life insurance to begin with is because they want to make sure if they happen to die earlier than expected that their income is replaced. They want to have enough money in savings upon their passing to take care of their family and children. This is one of the biggest proponents of many financial gurus today as to why you should purchase a term life insurance plan.
Added, most financial gurus recommend ten times your annual earnings as a starting point for replacing your income in an effective manner.
One of the great things you can do with a term life insurance plan is to curtail a portion of it towards the continued funding your family’s retirement plan. Think about it – if you die earlier than expected you cannot make contributions to your 401K plan or pension plan.
While your family may be ok in the short term financially they may suffer long term for not having the funds to pay for their retirement in an adequate way. Make sure a portion of your life insurance plan is designated toward funding your ongoing investment in your retirement plan to ensure that your family has a future not just in the immediate but in the long term as well.
4.Out of love
Love is the biggest reason why people purchase any kind of life insurance, term insurance or not. We do it because we love our family or spouses and don’t want to leave them burdened financially.
Term insurance is one of the greatest programs available because it allows you to custom tailor your program to the length of time that you need it for. For example I own a 30 year term life insurance plan because I decided it would be great to have insurance to cover until my projected retirement age of my early 60s.
However you may be older – in your 40s or 50s – and may just need it for 10 years or 15 years in length. We have programs that will cover shorter lengths and we can custom tailor it to the amount of time you need life insurance for.
6.Pure insurance need
One of the greatest things about term life insurance is that it only serves one purpose – to pay a death benefit upon your passing within the term time. There are no added extras to the plan which would drive up the costs such as cash value accumulation or any sort of extras like that. The advantages of this is that is simply serves a singular purpose of paying money when you pass away and nothing else, which allows the price to be much less expensive than permanent options.
7.Exams are optional
Life insurance has become very competitive these days and companies have come up with different ways to entice you to buy from them. One of the ways is to provide life insurance coverage without requiring an exam. It wasn’t too long ago that every term life insurance policy required an exam, but nowadays it is simply optional. This is great because if you have a fear of needles or don’t want to go through the hassle of a multi-month process to get approved, a non-medical process eliminates much of the frustration as well as the time required on getting your policy approved without sacrificing to a great extent on price.
Term Life Insurance Rates, Age 25 to 75*
Term Life Insurance Coverage – 10 Year Term – $100,000 in Coverage
Term Life Insurance Coverage – 10 year Term – $250,000 in Coverage
Term Life Insurance Coverage – 10 year Term – $500,000 in Coverage
Term Life Insurance Coverage – 10 year Term – $1,000,000 in Coverage
Why should I buy a mortgage protection life insurance?
My main rationale in persuading and helping a client to believe that a mortgage protection life insurance program is important is based solely around facts. A lot of sales people get a bad rap for pushing people into buying something that otherwise they don’t want or need using high pressure emotional sales techniques.
I believe in the opposite approach. I can more effectively sell life insurance to you if you understand the benefits and your need to own coverage. Once you understand that it is better to pay a premium than face the tremendous loss of leaving loved ones in a financially fragile position, I don’t need to push you into a decision. You make a decision to act on your own.
I always ask my clients a simple question. If you owe money, what would happen if you die? How would your family continue to make payments? It’s a simple thing to consider, but important in laying out your personal goals for coverage.
Stories from the field
Over the many years I have worked in the life insurance business I have seen many hard to place examples of clients with serious health issues.
In this section I want to detail some examples of how we have been able to help clients that have had significant health issues over the course of their lives and been declined for life insurance were able to get coverage through us with our meticulous understanding of what carriers are appropriate under certain health conditions. Let’s go ahead and get started.
Many people who have chronic obstructive pulmonary disease, or COPD feel like their ability to get life insurance is next to nothing. COPD and its related issues such as chronic bronchitis, asthma, emphysema, and black lung are chronic diseases that cause ongoing health problems. Many times when people apply for life insurance with these issues they’ll find that they end up getting declined or rated up so high that coverage becomes completely unaffordable.
I’ve helped numerous people get preferred life insurance coverage for burial and normal life insurance coverage with COPD, and that’s whether or not they smoke too. In fact I had one gentleman in Alabama who had COPD and didn’t smoke and we were able to get him prefered plus pricing on his life insurance. He was thrilled because the other options he was shown would have literally cost him thousands of dollars more a year in premiums.
Diabetes is one of those problems that can be difficult in some circumstances to get burial or life insurance approval. For example, we had one client who took an excess of 100 units of insulin a day and had type 1 diabetes on top of that too. Luckily we had a life insurance carrier that is more flexible with diabetic conditions, especially those with type 1 diabetes who take insulin to treat their diabetes. We were able to get prefered coverage on this particular person.
Sometimes people suffer from diabetic neuropathy as well, which can prove to be a difficult condition to get coverage for. We were able to get coverage for another client who took insulin and suffered from neuropathy. They were pretty pleased to find that they got coverage and a good deal too.
Some people think cancer is a uninsurable condition, especially when people with cancer may struggle to get coverage on the books. Luckily, this isn’t the case. Given enough time has passed there are plenty of carriers that will offer first day full coverage as long as the cancer has been in remission for a number of years or has been shown to have been completely eliminated for a number of years. In the short term, if it has not been too long since the cancer diagnosis or remission they may only be eligible for guaranteed issue life insurance coverage, but the chances of getting better coverage improve with time.
4.Liver or kidney problems
Many people have problems finding quality life insurance when they have a history of liver or kidney problems such as cirrhosis of the liver, hepatitis C, or chronic kidney issues. Luckily we work with carriers that in some circumstances will approve people for prefered coverage who have a history of hepatitis C, even if it has just recently been cured.
There are also some circumstances where people with chronic kidney problems can get prefered coverage given that some other circumstances related to their health are ok.
Many people count out their options for life insurance because they have had heart attacks, strokes, stints, seizures, aneurysms, or pacemakers. Luckily all of these issues with enough time can be circumvented and it becomes simpler to find quality, first day full coverage. I have had clients that have had all of these conditions at one time or another.
When enough time passed we were able to get that person enough coverage on the books that they were covered the first day. This was a great relief to them. They felt completely positive and happy about their coverage options and it gave them the peace of mind they were looking for.
6.Neurological health issues
I’ve had many clients who have had systemic lupus SLE, Parkinson’s disease, or multiple sclerosis. We were able to get them first day full coverage because we have access to a variety of carriers and some are more specialized at helping with certain health issues than others. Again this isn’t something you will commonly find with many life insurance companies because these types of issues are usually declined.
7.Behavioural health problems
Behavioural health problems include things such as depression, bipolar disease, schizophrenia, PTSD, and anxiety. Many of our carriers are able to get our clients first day full coverage with any behavioural health issue including depression, schizophrenia, and bipolar disease. Many people we deal with have suffered from issues related to these and have therefore been declined.
Don’t worry if you have suffered from any of these conditions as you’ll find it becomes much simpler than you would think to get coverage on the books even with these conditions.
How can I get mortgage protection life insurance?
This is the easiest question to answer out of all of these questions because the process of buying a mortgage protection life insurance plan is fairly simple. Let me give you a couple of different ways you can approach the application process and then give you my own preferred route.
You can go to your car insurance company to purchase insurance
The problem with most car insurance agencies is that they only represent one company. While they may be competitive on car insurance pricing, typically life insurance takes a backseat in importance. Therefore underwriting and pricing standards tend to be tighter and more difficult to deal with at car insurance agencies versus working with a broker.
You can buy off TV ads
There are a lot of different life insurance company ads on TV like Globe Life that advertise offers like $1 for $20,000 of coverage. All of these sound unique and useful, but many of them have price increases every five years and sometimes they even offer no coverage if you die from natural causes.
You can work with a broker
I’m obviously biased with this one, but I think we do a great job here at Buy Life Insurance for Burial helping clients find coverage that accomplishes their goals and gives their family peace of mind. We’d love to help you find an insurance plan that is right for you.
Go to buylifeinsuranceforburial.com and request a free quote to the left of the screen or call us at 888-626-0439 now and we’ll be happy to give you a quote in 10 minutes or less.
I hope you found this article helpful in your quest for life insurance. It’s important to remember that life is fleeting and we never know when we might die. Taking action today will ensure your loved ones are cared for when you pass away.
Get in touch by calling 888 626-0439 to find out what your life insurance options might be. We offer a stress free, no-obligation quote that takes less than 10 minutes. Meet your goals by talking to an expert today.
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