Published:
02/20/2020 04:18pm
Stop Foreclosures In Their Tracks, with Mortgage Protection
Stop Foreclosures In Their Tracks, with Mortgage Protection
Foreclosure rates peak, within 2 years of market crashes. One of the absolute best methods of preventing foreclosures, is by simply acquiring a Mortgage Protection Policy.
Mortgage protection policies are technically term life insurance policies, that are dedicated to paying off the mortgage, upon death. Many of these policies, also have built in protection that pay anywhere from 24% - 100% of the policy amount, if the insured has a diagnosed terminal, critical or chronic disorder. In addition, these policies can pay the insured, while alive, if they lose their ADL's (Activities of Daily Living), such as being able to independently get out of bed, take their own medications, independently use the toilet, etc.
Most borrowers are required to pay for PMI, when they get a loan. PMI is private mortgage insurance. It is a very common missconception that PMI pays off the loan upon the borrower's death or disability. This is incorrect. PMI is absolutely NOT the same thing as mortgage protection. PMI only benefits the lender. Upon the borrower's death, PMI is a policy that does pay something to the lender, but the loan dollar amount is NOT adjusted and everything is still owed to the lender, as if nothing has occured. In my business, I am constantly educating borrowers about how their PMI works.
Mortgage Protection, however, is designed and utilized to 100% benefit the insured (the borrower). It is a term life insurance policy, typically owned by the insured/borrower, and pays to the beneficiary, rather than to the lender. This amount is then (98% of the time this is the case. It is entirely up to the beneficiary, how this money is used) used to pay off the mortgage, completely eliminating the threat of foreclosure. These terms, can be 10-30 years, depending on what pricing and term length lines up with your budget when you acquire the policy. Your mortgage protection policy/contract will be guaranteed and "locked" for the entire term.
A few limitations to Mortgage Protection:1) Not everyone qualifies for these policies. Qualification is entirely based on the insured's health and age. Age can be 18 - 80. Health requirements vary, although typically, you need to have 3 or less active prescriptions, and no moderate or major health complications.
2) Price drastically increases, as you pass the age of 60. A healthy 50 year old may easily pay half of what a healthy 60/65 year old pays.
3) At the end of the mortgage protection policy term, your investment is not returned to you and you need to get reinsured. Most clients, at this time, choose a whole life insurance structured policy, to take them the rest of their lives.
A few inside tips:1) Lock in Mortgage Protection as early and as YOUNG as you can afford to. The prices go up steeply, the longer you wait.
2) For those that cannot afford Mortgage Protection, or do not qualify, based on age or health, speak with a life insurance agent about other options. You likely qualify anjd can afford a whole life structured policy, with a reduced payout (death benefit).
3) Typically, you should get the longest term length you can afford, as this locks in your health, coverage and cost, for the duration of the policy.
4) There is a term mortgage protection policy type that returns 100% of your investment back to you at the end of the policy term (10-30 years). This type of policy is called "Return of Premium" (ROP) mortgage protection. It typically costs 20% - 50% more than the traditional mortgage protection policy. However, if you make payments until the end of the term, every penny is returned to you in one wonderful check.
Feel free to check my website at https://www.protectwithinsurance.com/ for more details on mortgage protection, as found in the services tab, at the top of the website. Reach out to me if you have any follow up questions about this program.
