Understanding Mortgage Protection Insurance

Normally not. It's a life insurance agent that's going to provide you with the mortgage protection insurance options for you. And for the most part most of the people will use a term policy, and it'll be a 20, 25, 30 year term policy. And you might ask, well, if I have a 30 year mortgage, why would I get a 20 year term policy?

Well, it might just simply be cost. You know, depending on your age, depending on your circumstance, a 20 year term policy is going to cost less than a 30 year term policy. Now, some people will also just go strictly with that term, bare bones, no bells and whistles. But then you have another option out there that some people will take advantage of, and this is called return of premium.

What that is, is it's an additional benefit that that policy has that when you, if you don't pass away at the end of the 20 years. You're going to get 100 percent of your premium back. And this could be a pretty large number. You know, let's just say if you were paying $1,000 a year for mortgage protection policy, that's $20,000 that you're going to get back.

And you can use that for whatever you want. It's yours. Some people will use that. They'll put that chunk of money towards the balance of their mortgage. It might be enough to pay off their mortgage, the remaining mortgage, who knows? Some people will use it and put it aside for a small now final expense policy, insurance policy.

Some people. We'll just go ahead and spend it, but it's another option. There is a price difference. So you compare the both. I have a lot of folks that like that return a premium because in essence, you get that money back and , your insurance was free, . A person will say, well, I didn't make any interest on it, but you know what, you had that coverage that whole time.

So there is value there, from a monthly premium standpoint, but it's, it's there. And that's pretty much it. I, you know, I've had some folks that would buy and use a permanent policy for mortgage protection.

And this is something that they know that they're going to want to keep for their whole life. So they may take that it's going to cost more again, but based on the situation, they'll say, hey, I know that I know I have my mortgage covered and then I'm going to have if I outlive it, if I live this my mortgage, I still have this policy.

That's going to take care of my family for other reasons. You know, just return replacement of income and things like that. And they may be wanting it to last their whole life to leave a legacy. for their children or their grandchildren. So again, it's something that we have that discussion about when we talk when I talk with my clients to give them some options and see what works best for them.

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