What is mortgage protection? Mortgage protection is a type of life insurance policy that is structured to meet your needs. Simply put, mortgage protection life insurance pays off your mortgage in the event that you die before your mortgage is paid off.
Mortgage protection life insurance is structured so that you have total control over the policy. If you sell your home, if you refinance or if you change addresses, the policy will not be in jeopardy even if you make any changes to your mortgage or to your home. So it’s built as life insurance and upon your death, as long as the premium payments remain current at that time, your descendants will be paid the agreed amount of your policy.
Mortgage Protection Living Benefits
Depending upon the policy, there are a lot of times living benefits can be included as well. Those are situations where, while you’re alive, the policy pays in full and then the policy is over. Definitely your death benefit is a hundred percent covered.
Mortgage insurance pays off the mortgage upon your death. It can be structured in a bunch of different ways, but typically it’s going to be a 10, 15, 20, 25 or 30 year term, full coverage, life insurance policy. You want full coverage life insurance because it’s going to cover everything. It’s going to cover deaths due to medical conditions and accidental deaths.
Of course, the policy does not cover suicide or intentionally self-inflicted deaths.
Now, these living benefits will help you if you get diagnosed with a terminal illness, diagnosed with a critical illness or diagnosed with a chronic condition like neoropathy or diabetes neuropathy, which is becoming a lot more common.
This condition can be so severe victims can’t even leave the house. With a structured mortgage protection life insurance you can collect when incapacitated under the right circumstances and diagnosis. Mortgage protection is going to pay off that mortgage.
Mortgage Protection Payment Does Not Decrease as Mortgage is Paid Down
Now, the other thing you need to know is there are different ways you can structure this type of insurance, but we at Protect With Insurance have access to some of the best priced level, premium mortgage protection policies that you can get. And what level means is that over the course of that term, the policy does not decrease. Which is a big advantage because the price is very reasonable.
It’s a big advantage because let’s say it’s a 30 year term and let’s say you have a $300,000 mortgage in 20 years, you pass away. Or if one of the living benefits triggers, it pays it off. No matter what, they’re going to send it in the form of a check. So they’re going to send $300,000 to your beneficiary.
If it’s a living benefit, they send it to you. But if it’s a death, they send it to your beneficiary. From the time you took out the mortgage protection policy, let’s say for $300,000, and you pay off $150,000 of that loan, your beneficiary will still get the full $300,000
So payment does not decrease as the mortgage is paid down. There are no conditions on how your heirs can spend the difference. There are no restrictions. And with the policies Protect With Insurance work with, and providers we work with, that money is not taxed. So, if you get a $300,000 term life insurance policy mortgage protection policy and it gets approved, you make your first payment and the next day you pass away or get one of these diagnoses medical diagnoses right after, they will send $300,000 and there’s no taxation.
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