Mortgage Protection
Protecting their home is an important part of your clients financial lives. Likewise, how they would pay for their home at death, during a disability or after living to retirement is everything.
The freedom of knowing that the mortgage is paid off whether you live too long, die too soon or live into retirement is a story that resonates with everyone.
Whatever your clients’ current position, they may be looking to secure a new mortgage, already have an existing mortgage, or may be in the process of refinancing their home.
Whatever their current financial position is, we have a strategy that may interest them. In our example, we are assuming that a client currently has a 30 year mortgage and may be considering accelerating their mortgage payments while weighing their protection options.
We encourage our clients to be debt free and pay off their mortgage – how they do it can make all the difference.
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Illness, Disability or Death
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If the client becomes disabled or seriously ill, would they be able to access home equity if needed?
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Remember, mortgage payments and property taxes don’t stop!
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Would they lose tax benefits associated to mortgage interest?
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If death occurs, what financial implications would that mean to the survivor?
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Lets look at an example for a client that has the option of a 30 year or 15 year when purchasing their new home.
30 Year Mortgage
$300,000 original mortgage at 4% – monthly payments: $1,432.25 ($17,187 per year)
15 Year Mortgage
$300,000 original mortgage at 4% – monthly payments: $2,219.06 ($26,628.72 per year)
The Difference – $9,441.72
(the 15 year mortgage costs $786.81 more per month, or $9,441.72 more per year).
Now Consider Life Insurance
$9,441.72 is the difference between a 15 year and 30 year mortgage. If that money was put towards a life insurance policy, what benefits might be provided?
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Death Benefit – Dollars for the heirs to use to pay off the mortgage!
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Living Benefits – access to the death benefit in case of a Terminal, Chronic or Critical illness. Benefits could be used to help make mortgage payments!1
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Waiver of Premium Rider – If they become disabled, the waiver of specified premium rider can waive their premium payments.
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Potential Cash Value Accumulation – access to cash values could help make mortgage payments!
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Tax Benefits – there are possible tax benefits they might lose if the mortgage is paid early.
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Control – of cash flow and options they may not otherwise have had if they had paid the mortgage off early.
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