Just like many of you, when I refinanced my home, I was flooded with letters in the mail regarding mortgage protection. These always seemed to come in the most vibrant colors and forever marked URGENT. At the time, I thought that these letters came straight from my bank or lender to find it later, not to be the case. These mailers come from Mailhouses paid for by insurance marketing organizations and will acquire a person's information from the county recorder with the lender or bank name alongside the mortgage amount remaining on the home. Mortgage Protection Insurance is designed to pay off the house in the event of an untimely passing. Structuring a Mortgage Protection life insurance plan is, without a doubt, one of the most important decisions that someone can make to protect their loved ones. The issue with these plans is that they are commonly marketed as something other than what they are. Life Insurance. As an advisor, I have come across several people who have stated that they didn't want or believe in life insurance, yet they had a Mortgage Protection plan.
Now, what exactly is a Mortgage Protection plan? This plan is what's known as a simplified issue life insurance. There is no medical exam required, and applicants typically know either immediately or shortly after whether they have been approved or declined. This type of policy replaces a full medical exam, which involves a nurse coming out to the home to perform the required physical on the applicant. These simplified issue plans are very beneficial for people looking to protect their assets by having a benefit in place that would pay off the home in the event of an untimely passing as-well-as if the customer were to become disabled, critically, chronically, or terminally ill. There are many benefits associated with this policy type, which allows you to secure coverage quickly and conveniently.
In closing, mortgage protection insurance is Life insurance marketed under the name mortgage protection insurance by individual independent brokers to increase life insurance sales. I'm not saying these policies are wrong; however, it should be noted that a traditional term insurance plan can be better in many cases.
If you're unsure whether you should choose a simplified issue mortgage protection plan or a term life insurance plan that covers your mortgage balance, we're here to help guide you. As an advisor, it is vitally important that we provide transparency and education to our clients.