What is Mortgage Protection Insurance Anyway

This a big buzzword for many insurance companies out there. But basically all in all it is life insurance. Plain and simple. The only difference is, if you have had a major life event in the last 13 - 18 months, with some carriers, you qualify for what is called simplified issue. That means that normally no medical exam is required to get insured.

What is a life event? Well, that's where the "mortgage part" comes in. A life event is a birth, marriage, divorce, mortgage purchase, or mortgage refinance. Therefore the name Mortgage Protection Insurance. It could just as well be called Birth Protection Insurance, Marriage Protection Insurance, or Divorce Protection Insurance. But as you can see those titles lend themselves to some...well...questionable market positioning.

It is just a fancy name for a term life policy with a death benefit in the amount of your mortgage. That way if you die, the house gets paid and the wife and kids get to stay there now that they have lost your income. I know that sounds a bit morbid, but hey, that's life insurance. And even if it is a divorce, it still fits. After all, if you are the one leaving the home, those are still your kids. Touchy subjects, death and divorce. But then again, so is homelessness.

Now, you might say "but I already have a life insurance policy." Great! That's a good thing, but let us say you have a $1,000,000 whole life policy. And let's say your mortgage is $250,000. And lets say that your income is $120,000 a year. That million is going to last a little of 8 years by simple math. Well, if your wife or husband or kids use the policy to pay off the house so that they can stay there after your death, the time just got cut to 6 years.

Bottom line, because of the fact that you just bought a house, had a baby, got married, divorced or refinanced, you get to apply for that extra security of leaving your family with a roof over their heads and no reason to dip into what you planned to leave them for replaced income. And you get to have it simplified issue.

As an added bonus, you can set it up with what is called a Return Of Premium rider. Basically at the end of the term, if you are still alive and kicking, you can get your money back. Think of it as a savings account with death benefits.

Listen, the last thing I like to talk about is my own mortality as well. But the fact remains. It truly is the debt that all men pay. So, if you are interested in protecting your family against an untimely repayment of that debt and the loss of your income, you'd better do it while you have the chance to do it easy. After a while, you don't get a choice. Later on due to age, illness, or injury, you may not even qualify to receive life insurance at all. Simplified or Non-Simplified.

I'll give it to you straight. There are other ways to insure your family's financial future. Investments, 401Ks, CD's, and even annuities. All of which are geared towards the hopeful eventuality that you live. Life insurance is there in case you die. Both sides of that fence are recommended. Unfortunately most people don't look at the dark side. If you are one of those, don't keep pretending it is not there. Do something about it.

Michael Lynn Graves

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