Mortgage life insurance consists of several elements:
- Level Death Benefit
- Level Premium
- Length of Term Coverage normally designed around length of mortgage
- Unique riders:
- Critical Illness
- Return of Premium
- Long Term Care
- Living Benefits
- Many are simplified underwriting.
For many years coverage was built on a Universal life chassis dialed to your mortgage term length. This allowed lots of flexibility, less underwriting and an ease of adjusting between cash building or cheap term prices.
Now most are built on Term Life chassis designed with some of the unique riders listed above.
What are the common reasons for purchasing a Mortgage Life Insurance Policy?
- The premiums remain the same and do not increase until end of desired term.
- Can provide a large amount of death benefit with the lowest cost for coverage.
- Can pay off debt or obligations which have a time length – ie… 10 -15 -20 or 30year mortgage.
- Affordable protection when you need it the most.
- When you are young, you may be the least likely to die, however; if you do, you have the most to lose! Loss of income for your family and large debts to pay off.
Who should buy Mortgage Life insurance?
Anyone with a specific goal or obligation to be met within a 30 year time period should consider Mortgage Life, many of the plans require you to have a recent mortgage purchase within the last 6 months to qualify for simplified underwriting with out an exam.
Young families need more coverage; older families need the lower premiums. It is a viable option up till 75-80 if your health remains okay.
Who should not buy Mortgage Life Insurance?
People who do not have a Mortgage or obligation lasting 10-30 years should not buy a mortgage life. People who do not find value in the riders listed above should consider a straight Term Life Insurance.
People who have a desire to have coverage for there whole life should consider a permanent life insurance like Whole Life Insurance, Universal Life insurance or Indexed Universal Life insurance.
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