How do you convert term-structured mortgage protection insurance into permanent life insurance?

The first thing you need to know about converting policies, is that all mortgage protection if built correctly is built as term structured life insurance, which is wrapped around the mortgage and pays it off upon your death or if you experience health decline.

You can change it from term into permanent whole life insurance, meaning that once you do the conversion, the cost will never change, it will never run out, never expire, and it’ll start to build cash value, which we have lots of blogs just on the cash value. I encourage you to look at those, but that does not have much of a selling point. So I want you to understand right now that when you convert into permanent whole life insurance from a structured mortgage protection policy, the cost is significant and expensive every month until you pass or until the policy pays for some other reason.

And most people cannot afford it. Just to give you an idea, if you have a three hundred thousand dollar mortgage protection policy and by the way, these figures are going to either be sponsored oddly or more likely if they’re going to be highly inaccurate. This is purely an example. Let’s say that you have a three hundred thousand dollar term structured mortgage protection policy and your cost is one hundred and fifty dollars a month. If you convert that same policy into a permanent whole life insurance structured policy, your cost will likely be more like eight hundred dollars a month or six hundred dollars a month, significantly more.

I was right with my first figure probably converting into an eight hundred dollars a month policy. And the reason why the insurance carrier will charge so much for that conversion is that their risk has gone up because you’re likely to outlive that policy. But now all of a sudden, yes, you’re paying them a lot more money every month. But it’s a big dollar policy that they have to pay you.

All you have to do is just hang in there and keep making payments, but they’re going to have to pay you three hundred thousand dollars. And so they’ve calculated this and they give you a figure of what the premium needs to be based on that level of risk to them. And this is, of course, based on your current age and it’s largely based on your age and health. There are other factors as well.

For example, what state you live in, believe it or not, what gender you are. Men statistically live five years less than women do. So men in most states have to pay more than women do. So my coverage is higher than my wife’s coverage.

So I hope this has been helpful. If you have any other mortgage protection questions, please reach out to us. We’re happy to help you stay safe out there.

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