Mortgage Protection Vs Term

[solinor]

Hi guys,

So I'm new to insurance.. Looking to get started in Mortgage Protection. I've just signed on with a newer brokerage that is promising some great things. However, I've got some questions and was hoping some folks could better educate me about the differences between Mortgage Protection and Term life insurance. From what this brokerage was telling me, Mortgage Protection sounds like a very easy sell. Low premiums, hardly any underwriting, no medical exams, and even return of premium at the end of the term. Best of all you get paid your commission quickly.

Upon doing a bit of research on my own, however, I'm coming across folks that are saying term is a much better value for people than mortgage protection. Supposedly if you don't smoke and are in good health, almost always term insurance is going to cost less. Also, term coverage is portable and the beneficiary being your loved one is obviously much better(unless you can sell the house quick). Term is also level, whereas in MP the value decreases due to your mortgage being paid off slowly. Another thing that really concerns me about MP is post-claim underwriting, where an insurance company can actually deny your claim after your loved one dies for what seems like any reason they feel like.

I do have a few questions. Can a mortgage protection policy be competitive with term pricing if it's offered in a critical period type policy.. as in instead of paying off the house completely, it would pay the mortgage for 1, 2 years? And do all MP policies come with the return of premium rider, or is that extra? On term, is a return of premium rider a costly rider or relatively inexpensive?

I want to provide the best value for the families I am helping, I can't sell a product in good conscious knowing that there are better value products out there for cheaper. Someone here, please sell me mortgage protection. Why should anyone here buy Mortgage Protection and not term?

 

[10X]

Hi guys,

From what this brokerage was telling me, Mortgage Protection sounds like a very easy sell. Low premiums, hardly any underwriting,...

Run as fast as you can...your broker is lying to you...if it was easy, everyone would be doing it. If it was easy, 90-95% of new agents wouldn't quit in the first year.

 

[adjusterjack]

Why should anyone here buy Mortgage Protection and not term?

Guess what?

Mortgage Protection IS term insurance.

Ta Da.

Mortgage Protection is a type of term insurance where the death benefit decreases along with the decreasing balance of a mortgage. It can be written to follow a 30 year mortgage or a 15 year mortgage.

The rates are lower than level term for the same period because there is less and less of a death benefit as the insured gets older.

Low premiums, hardly any underwriting, no medical exams, and even return of premium at the end of the term.

The same can be said of any kind of life insurance if any particular insurance company wants to offer its products under those criteria.

Another thing that really concerns me about MP is post-claim underwriting, where an insurance company can actually deny your claim after your loved one dies for what seems like any reason they feel like.

You need to learn about the contestibility provision that is present in any life insurance policy.

Here's an explanation:

Constestability clause of life insurance policies

as in instead of paying off the house completely, it would pay the mortgage for 1, 2 years?

A death benefit is just money. No matter what kind of policy it is, the beneficiary can use the money any way he or she sees fit.

 

[mark0525]

Is your even anybody out there selling decreasing term for mortgage protection

 

[DHK]

I think the OP already ran away 4 years ago.

Mortgage protection is simply life insurance. It doesn't matter what kind of policy it is.

You can have term insurance to cover the mortgage + disability income to cover payments in the event of disability.

You can have permanent coverage to do both + help accelerate the mortgage payoff.

"Mortgage protection" is simply a marketing term for life insurance. There are some companies that will have products that 'cater' to that marketing term, but it's just life insurance.

Same thing with "Final Expense". It's a marketing term for life insurance. There are some (many) companies that will have products that 'cater' to that marketing term, but it's just life insurance.