Protecting Your Home With Mortgage Insurance
Your home may be your family’s largest asset; their largest financial responsibility and that’s why we are providing you with these valuable mortgage protection tips. A mortgage protection insurance policy can help them remain in your home after you’re gone.
This article will cover mortgage protection tips you can utilize to ensure your family will be protected and your mortgage will be paid off when and should that happen.
What is mortgage protection? It is a type of life insurance that is also a term policy, which means it does expire at a certain point.
If you pass away during the “term” when the policy’s in force, your loved ones receive the face value of the policy. They can use the proceeds to pay off the mortgage. The proceeds are tax free.
The proceeds from your policy can be used for any purpose your beneficiaries choose. If your mortgage has a low interest rate, they may want to pay off high-interest credit card debt and keep the lower-interest mortgage. Or they may want to pay for home maintenance and upkeep. Whatever they decide to do, that money will come in handy.
The time clock can run out for you 10, 20, 30 years from now. You never know. Typically it can be 15 to 25. You just want to make sure your term mortgage insurance is still in play when you do.
There are term policies out there that are one year terms but you don’t want touch those renewables because they are bad news for you. You’re basically throwing your money away with those. But with a 10, 15, 20, 25 or 30-year mortgage protection term, you’re going to be protected because chances are you will expire before your policy does.
Your family’s going to be protected. And during the course of that terms some of these policies can give you the option to continue the term mortgage insurance predictable scheduled dollar amounts. It’s will be a huge increase in cost after the term and you can keep it going. The idea with these mortgage protection policies is that the term life insurance pays off your mortgage, or at least a good chunk of it after your gone.
It’s going to be a fixed amount that you agree to from day one. It’s going to pay that off at the end of the term and the way it accomplishes that is usually upon death, but not always.
Mortgage Protection Tips # One
The first mortgage protection tip is that level policies are the best type of term policies for mortgage protection. There are three different types out there. There’s an ascending policy, which goes up. Their is a descending policy that goes down over time. There is a level policy that stays the same for the whole term.
The reason why level policies are the best is because the coverage doesn’t change and the price does not change so the premium payments are easier to budget if you have the same price always.
Also you get today’s prices through the entire term. In another 20 or 30 years you’re still paying prices from 20 or 30 years ago and the dollar value has shrunk. You are ahead of the game, which is a steal down the road. It may cost more for everything else but this policy is not going to be increasing in cost.
That’s a good thing. The other reason is that you want to have level coverage even though the mortgage is going to be going down, theoretically. It’s good to keep the same level coverage amount. If you set up a $300,000 policy and in 15 years, you still owe $200,000 on the mortgage and you pass away, your beneficiary receives a check for the policy amount of $300,000. They can use that money however they want or need to. There’s no restrictions and it’s tax-free. They’re not going to be taxed on that money. With the $300,000 can pay off the mortgage and keep what’s left over.
The rest of that money is now in their bank account. They have a hundred thousand dollars they did not have before and own the house free and clear. They can utilize the extra cash to live on and that is going to be a game changer. Having that money is going to make everything so much easier and so much better for your loved ones.
So that is how it works. It’s very clean. It’s very simple. It’s very predictable and it’s easy to budget because if you can budget it today, chances ar, tomorrow gets easier rather than harder. because inflation benefits you if you’re paying for the coverage with the prices of today. It is a good thing for paying the locked in premium price.. Otherwise inflation is terrible for everything else. Read on for more mortgage protection tips.
Mortgage Protection Tips # Two
A lot of people think they have mortgage protection when they take out a mortgage and are paying Private Mortgage (PMI) insurance attached to their loan with the lender. They don’t realize they are not being protected by the PMI. Only their lender is. So unless you set up a mortgage protection policy with a life insurance agent, unless you’ve done that, you do not have mortgage protection that covers you specifically.
It’s not part of your mortgage payment. I’s a separate fee you are paying that protects your lender if you default. . The PMI, which is private mortgage insurance, is not homeowners insurance. Neither of those type insurances are mortgage protection that ensures your family gets to keep your home after you die.
Your lender, your, your mortgage broker can not set you up with the type of mortgage protection you need for your mortgage to be paid off after your death so your house can be left for your beneficiaries . They can only set you up with PMI. Which does not benefit you. It’s required that you have PMI with most lenders. Conventional loans require PMI to be built into your mortgage payment.
When you pay your PTI principal, taxes and interest, typically most people don’t realize they are still unprotected. The PMI is part of the whole deal along with the homeowners insurance they must maintain. Usually you’re going to have your PMI sandwiched in with the mortgage as well, especially if you had less money to put down when you took out the mortgage.
For mortgage protection that is going to benefit you, you have to get it through a life insurance agent that provides mortgage protection like we do at Protect With Insurance.
We provide the protection that will allow your heirs to pay off the mortgage upon your death and keep the house.
It’s extremely important to know the difference between PMI and term mortgage insurance. You got to be real about that. We have had a lot of clients that they were in denial about that thinking they had it.
When we really looked into it they were pretty upset when they realized that what they had was not for them. The PMI didn’t didn’t benefit them. It was just a requirement and they were, sold some oil. Be aware of the difference between them. Don’t be fooled by your lender. Read on for more mortgage protection tips
Mortgage Protection Tips # Three
Mortgage protection tip number three addresses, which are living benefits. When it comes to life insurance most everyone knows about death benefits. Death benefits come into play when
you or a loved one passes away. At that point is when they collect the benefit of the insurance policy. That’s why most people get life insurance. They want those who are left behind to have some money or keep your home after they die.
Living benefits are different and they’re very important because they can benefit you and your family while you are still alive.
Life insurance with living benefits allows you, the policy owner, to build cash value through your life insurance policy that accumulates over your lifetime. This is considered a living benefit of life insurance because, in contrast to a death benefit that pays out when you pass away, you can use the money while you’re still alive.
If you get a terminal health condition diagnosis or your develop a critical health condition it is possible for you to receive your insurance money while you are still alive. There are categories of health that your doctors can tell you about, or you call us up and list them for you.
If you are diagnosed with a terminal or critical medical condition, then your policy will likely send the entire amount of the value of your policy while you’re alive. If you have a $300,000 policy and you get such a diagnosis from your doctor, you send a doctor’s letter explaining there diagnosis to your life insurance company and most of these companies will send you a one hundred percent of that policy. They will send you a check for $300,000. They send it to you, not your beneficiary. You have that money too use as you need to use it. Use it medically. Use it to pay off your mortgage. Save it for a rainy day. Give it to your heirs. Do whatever you want to do with it.
You’re not taxed on it. There are no penalties and no restrictions. The policy ends.
If it pays a hundred percent, living benefits are incredibly important. It is so expensive to get sick or to die. It’s terrible. It’s so expensive when these things happen. This is a way to meet those financial challenges head-on.
This is a very, very important thing to understand when considering life insurance, especially insurance that will pay off your mortgage. We can help you understand what securities are in place with a mortgage protection policy that will take care of you and your family.
We hope these mortgage protection tips have been helpful. Please reach out to us, go to our website www.protectwithinsurance.com. Email us at 928-323-0933. We are ready to help.