Mortgage Protection | Living Benefits

Mortgage Protection plans are designed to ensure that when you die, your family does not lose the family home. It is also possible to add "living benefits" to your policy that can offer even more coverage - coverage you can use while you're still living.

Why Choose Mortgage Protection?

Pays you beneficiary when you die, not the bank!

If your loved ones are in a position to pay the mortgage without using the death benefit, they are free to use the proceeds for other expenses, including children's tuition, auto payments, your funeral, etc. They money is paid tax-free to your beneficiary, not to the bank.

Provides more than a death benefit!

The death benefit is important, but most mortgage protection policies offer living benefits, which pay out in the event of death, disability, chronic illness or critical illness.

Provides TAX FREE income when you retire!

By choosing an Indexed Universal Life or a Whole Life policy, you can create enough of a cash value that you're able to withdraw the money TAX FREE to help fund your retirement.

Benefits of a Mortgage Protection Plan

In addition to a death benefit, it may be possible to add additional "living benefits" to your policy. These optional riders offer even more protection to ease the financial burden if you experience a serious illness or injury.

Death of Policy Holder
Disability Determination
Critical Illness Diagnosis
Chronic Illness Diagnosis
Return of Premium (ROP) refunds your premium if you don't have a claim.

Three Ways To Create a Mortgage Protection Plan

Mortgage protection is a concept, not a product, so there are a number of ways to protect yourself and your family, depending on your budget and any underwriting underwriting challenges you may have. A skilled broker will assess your needs and resources and help you get the best value using one of the following policy types:

Level Term Coverage

Indexed Universal Life

Whole Life

Level Term Coverage

A term policy with a level death benefit and level premiums is a simple and cost-effective way to protect your mortgage. Because these policies typically have a accelerated benefits ("living benefits") riders available at little or no cost, this is the most common (and inexpensive) way to protect your loan.

One perk of level term insurance is that, at the payout if you die at the end of the term is the same as if you die at the beginning of the term but your mortgage balance should be considerably less after 20 to 30 years of loan payments. This can mean "extra" money for your family when they need it the most.

At the end of the term, your policy expires, though many carriers offer the ability to renew a term policy or convert it to a permanent policy.

Indexed Universal Life

Universal Life has both an insurance and a cash value component to it. It is important to know that an Indexed Universal Life ("IUL") policy is indirectly tied to the performance of the stock market but it has a minimum return (usually 0%). This means that, as the market does well, your policy will accumulate cash faster but if the market crashes, you won't lose money; you'll just earn 0%.

IUL policies usually have the same living benefits riders that a term policy would, but because you're able to accumulate cash, the monthly premiums tend to be higher. They are, however, typically cheaper than Whole Life policies, they offer the ability to increase or decrease your monthly premium and funded well enough, they can be an excellent way to supplement your retirement income with tax-free money.

Whole Life

Whole life is less commonly used for mortgage protection because it usually does not offer living benefits, but it does have one very important use: Because the underwriting requirements for whole life insurance are typically less strict than for Term and IUL policies, Whole Life can be a great way for someone with serious health issues to still own a policy that will pay the mortgage when they die.

The death benefit coupled with the ability to withdraw cash from the cash value of the policy to help pay mortgage payments or medical bills in the event that you are too sick to work makes Whole Life worth considering - especially when Term isn't possible because of your health or occupation.