Mortgage
Protection Plan

Homeowner who has an existing outstanding real estate mortgage loan balance should have the corresponding mortgage protection plan to match the FULL mortgage loan balance and cover the entire mortgage loan term period. It is similar to the fire insurance which is required by the bank. In some cases, the flooded insurance and earthquake insurance are recommended. It is also recommended to have home warranty repair insurance for the plumbing, electrical, appliance and roof repairs.

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The mortgage protection plan provides the following functions. 

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• Payoff the mortgage loan in the event of death, illness, or injury

• Return all premiums if the benefit is not used by the end of the mortgage protection term

• Have the funds to prevent the family from losing the home

• Pay cash in the event of heart disease, cancer, stroke, injury, or long term care

• Pay cash in the event of terminal illness or critical illness

• Pay monthly funds in the event of chronic illness

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There are several options that are perfect for mortgage protection purposes. 

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• Term life insurance (most affordable)

• Term life insurance with living benefit ABRs*

• Guarantee universal life insurance

• Guarantee universal life insurance with ABRs

• Guarantee universal life insurance with ABRs and ROP* (return of total premium paid back to policy holder)/Cash-Out

• Index universal life insurance

• Index universal life insurance with ABRs

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Benefits of Mortgage Protection Insurance

 

• Piece of mind in knowing mortgage payments wouldn't burden the loved ones in the unfortunate events of death, illness or injury. 

• Protection to protect the family from losing home

• Easy application with no medical exam requirement

• Affordable rate as low as $20/month 

• Customize coverage that can last until the mortgage is paid off -- timing is up to the mortgage borrower

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ABRs* stands for Accelerated Benefit Riders which pay death benefits to life insurance policyholders while they are alive. Benefits are paid to policyholders with a chronic illness, terminal​ illness, critical illness and injury. 

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ROP*/Cash-Out stands for Return Of Premium/Cash-Out rider which provides for a refund of the premiums paid on a term life insurance policy if the policyholder doesn't die during the stated term. This effectively reduces the policyholder's net cost to zero. A policy with a return of premium provision is also referred to as a return of premium life insurance.

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Why do I need mortgage protection insurance? 

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None of us can know when we will pass away or become terminally/critically ill, critically injured or disabled. If you are a homeowner or real estate investor, it makes sense to apply for mortgage protection insurance coverage to protect one of the largest asset or liability of your life. 

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What is the difference between mortgage protection insurance and homeowner's insurance? 

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Both types of insurance are necessary for homeowners or real estate investors. Homeowner's insurance is important to cover personal liability and property damage, such as damage from weather, theft or vandalism. Mortgage protection insurance covers the mortgage payments (or pay off the mortgage) if the mortgage borrowers are unable to repay. 

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How much mortgage protection insurance coverage do I need? 

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Everyone has difference insurance coverage needs. General rule of thumb, the coverage should be at least the same amount of the total liability of the borrower, including the home and investment properties. The coverage should protect the borrower and frailly from the financial burden when the unfortunate events happens. 

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How much is the mortgage protection insurance?

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Mortgage protection insurance is generally the least expensive type of life insurance (typically term life insurance) to pay off the mortgage. If the mortgage borrower can afford higher premium, a living benefit (or terminal illness, critically illness, critical injury and chronic illness accelerated benefit riders ABRs) and return of premium (ROP) can be added to the coverage.  

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Is a good mortgage protection insurance difficult to shop?

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Time is a rare asset. Insurance can seem complicated. However we keep it simple and easy. We are a network of insurance advisors to help you along the way. We partner with 90+ insurance companies. We do the shopping for you to ensure you get the best coverage at the best price. 

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Case Study (Andrew and his pregnant wife)

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Andrew is 28 and recently purchased his first home for him and his pregnant wife. He wants to secure coverage for his growing family. He purchased a mortgage protection insurance that has a coverage until their mortgage is paid off. 

Coverage: $100,000

Term: 30 years

Rate: $22/month

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Case Study (Jenny and her partner) 

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Jenny and her partner are both 31 and have two houses they rent out. They want to make life insurance a part of their investment strategy. She purchased an affordable insurance solution would ensure that Jenny's investments stay with her partner if she suddenly passed away and suffered illness or injury. 

Coverage: $250,000

Term: 20 years

Rate: $14/month

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Case study (Michael and his family)

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Michael is 44, has two adult children in college and one entering high school. He wants to ensure that his mortgage payments are covered and his home stays within his family. He purchased a mortgage protection insurance which enables Michael and his loved ones to keep up with mortgage payments in the event of his death, illness or injury. 

Coverage: $500,000

Term: 20 years

Rate: $115/month

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Case Study (Richard buying Guarantee Universal Life insurance with ABRs and ROP/Cash-Out features)

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At the age of 37, Richard purchased a home for his family with a mortgage of $200k on a 30-year mortgage repayment period with 4% interest rate.

Coverage: $350,000

Term: 20 years or 25 years

Rate: $220/month

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At the age of 42, he wants a peace of mind that the mortgage is protected and will be paid off in the event of death, illness, or injury. He purchased an affordable GUL life insurance with ABRs and cash-out rider (or ROP) features to match with the outstanding mortgage balance. As a policy holder, he can request a full refund of premium paid at the 20th or 25th policy anniversary if he wants to exit from the policy. The policy also comes with the accelerated benefit riders (ABRs) including terminal, critical and chronic ABRs. The policy protects his entire mortgage repayment period term.

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At the 20th policy anniversary, the cash-out value of the policy would be $52,598. Richard checks the amortization schedule and finds that there would be $51,064 left on the mortgage at the time the policy’s 20th anniversary would hit, and the cash-out rider would provide just enough to pay off the mortgage in time. He would have enjoyed the $350,000 death benefit protection for 20 years when he needed it to protect his family, surrendered and cashed out the policy using the cash-out rider, and then redirected the premiums he had paid over the years to help to pay off mortgage.

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As a result, his mortgage is paid off and the policy is cancelled. 

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