Mortgage Life Insurance- How Does It Work?

[Norwayguy]

You should probably change that one to Richard Head, hall monitor will be by any minute and you will get 10 demerits

But Richard doesn't fit.

 

[jdeasy]

There can be a lot more benefits than JUST death/terminally ill. Those are the big ones, there are many riders (add-ons) to these policies such as disability, or unemployment. But ultimately it is life insurance structured to pay for your mortgage should anything happen to you.

Where would one find an unemployment rider to put on an MP policy or on any policy for that matter?

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Since ThelmaBurnett is a consumer, you need to be careful in how you talk about various riders.

In short, "mortgage" life insurance is a life insurance that is issued for at least the amount of your mortgage. If the insured passes away while the policy is in force, the beneficiaries receive that amount of life insurance benefits.

The "disability" is typically a rider to waive the payments on the life insurance policy (NOT the mortgage) in the event the insured is disabled and cannot work. If this is a cash value policy, it may include cash payments into the policy... but not cash flow to you.

If you wanted cash flow to you in the event of a disability, you would need a disability income insurance policy.

The "unemployment" rider (that I've only seen with Mutual of Omaha) will make your premium payments for you for a limited period of time (I've seen as much as 6 months) as long as you were unemployed due to being laid off. Again, this is a benefit towards the policy when your cash flow is interrupted.

There is no "unemployment insurance" except through various government/state programs.


ThelmaBurnett, because you are indicating that you're having debt and cash flow problems... it would be a wise thing to purchase some kind of life insurance. What kind, How much, from whom, and when... is up to you and a qualified agent to help guide you through such decisions.

I might also suggest some marriage counseling to help you improve your financial communication and mutual needs.

Not completely on base there. When I was selling a lot of MP we had disability riders that did, in fact, pay the mortgage if the policyholder was disabled. or at least paid the money directly to the policyholder. If they chose to not use it to pay the mortgage than it was on them. Most that I used had a 90 day elimination period and then 24 months of payments if the person was disabled that long.

I have a client now that his 90 days is up in a week or so and will start getting payments.

The WOP rider on that one is 6 months.

That's with F&G and they pay the disability income in addition to any other income such as work comp. This guy is also on work comp so he will still get his payments. Shenandoah had a non occupational disability rider. If I had put him with them then he wouldn't be able to draw it.

F&G was the only company I had that did the "unemployment" rider. it was gimmick. People thought that it would pay pay their mortgage if they were unemployed. It only paid their premium and only for a short time. To the best of my memory they had to be unemployed for a couple of months before it kicked in. They also had to have the policy for 2 years and it was a one time usage thing. And, if it was an ROP term policy then the monies paid by that rider would be deducted from from the amount you would get at the end of the term.

NAA used that unemployment rider language on the lead piece. Many people returned the card for that reason alone. Very deceptive!!

 

[MrDrClover]

Mortage life insuramce is for the benefit of the borrower. You should consult a life insurance agent and show him the details of your previous insurances for a better advice.

That is not necessarily true. Mortgage Life Insurance is just life insurance that is marketed to people with a mortgage. Anyone can be the beneficiary and it is rarely the mortgage company. The borrower only benefits if they are the beneficiary but in most cases they are the insured and not the beneficiary. That is unless there are multiple borrowers then this is more likely.

Long story short. Mortgage Life Insurance (or Mortgage Protection Insurance) is just life insurance with a marketing angle.

Although I do agree with the second part "You should consult a life insurance agent and show him the details of your previous insurances for a better advice."

 

[WinoBlues]

Just life insurance. That is it. Same with FE, pension max, collage plans, survivor income and income replacement plans. Marketing terms.

That is not necessarily true. Mortgage Life Insurance is just life insurance that is marketed to people with a mortgage. Anyone can be the beneficiary and it is rarely the mortgage company. The borrower only benefits if they are the beneficiary but in most cases they are the insured and not the beneficiary. That is unless there are multiple borrowers then this is more likely.

Long story short. Mortgage Life Insurance (or Mortgage Protection Insurance) is just life insurance with a marketing angle.

Although I do agree with the second part "You should consult a life insurance agent and show him the details of your previous insurances for a better advice."