Mortgage Protection vs Term Life Insurance

Mortgage Protection vs Term Life Insurance

 

      In 2001 we used to mail out thousands of direct marketing pieces to people who had just purchased or refinanced a home. A lot of people do not realize their loan information and address is public information and after closing on their loan they start receiving multiple letters in the mail talking about protecting their mortgage payments in the event of death, disability, illness etc… Often times the marketing mail pieces will even look like they are coming from their lender… but they are NOT.  In the 1980’s & 1990’s there were still some life insurance companies who sold decreasing term policies.  These were policies where the death benefit amount would follow people’s loan balances and the loan would be paid off in the event of death.  At this point in time as  far as we know, there are no life insurance companies who even offer decreasing term policies anymore. But this day there is an entire industry built around selling life insurance to people who have just purchased a home or refinanced their current residence.

     Here is an example of how the prospecting call use to go:

“Hi is this John?  Hi John, my name is Carter Gray with Pacific Insurance Group calling about your loan with XYZ Mortgage Company for $237,692. We recently mailed you a letter talking about how to protect your mortgage in the event of a death, disability, or critical illness, and my job is just to swing by for 15 minutes to show you the programs, give you the information, and answer any of your questions. I currently have appointments in Seattle on Tuesday and Thursday evening and I was wondering if it was ok for me to drop by, again my job is just to show you the programs, would Thursday at 7pm be a good time?”

      The marketing masterminds behind the “Mortgage Protection Program” intentionally want to pull the wool over people eyes by thinking “Mortgage Protection” is something different than term life insurance. Here is the SPOILER… it is all just level term or permanent life insurance and it has nothing to do with someone’s lender or mortgage amount. Bottom line, if someone purchased a policy and has a premature death or a qualifying sickness the death benefit will be paid directly to your beneficiary(s) and they have liquid cash to pay off the loan. It is just a fancy way of marketing EXPENSIVE level term life insurance.

Questions You Should Ask with Regard to “Mortgage Protection” Insurance

  1. If I die, how does it work with my beneficiary(s) paying off the mortgage?  How does the title get transferred correctly into the name of the people I want it to go to?
  2. Isn’t is cheaper to just to combine my total life insurance need into one policy and purchase a level term life insurance policy?  What is the cost per thousand for this “Mortgage Protection Policy”?
  3. Is the life insurance salesperson an independent agent who is contracted with multiple life insurance companies, and do they offer low cost level term life insurance policies? (It is best to wait until you see the “Mortgage Protection” rates before asking this question if you want to see a life insurance agent really squirm.)

If you are considering purchasing “Mortgage Life Insurance” or any type of life insurance, it is wise to speak with an experienced independent life insurance agent who can provide you with the best policies at the lowest cost possible. We have several agents at Pacific Insurance Group who will be happy to assist you in making the right decision. Call our office at 425-246-4222 or visit www.pacificinsurancegroup.com and generate a free instant life insurance quote without requiring inputting your phone number or email. When you are ready to talk to us, we are here to help.