Should You Buy Mortgage Protection Insurance?
This is a questions I'm often asked. There is a real simple answer which is, "maybe." I know it sounds like a copout but here's the explanation. If you've ever bought a home or refinanced you've no-doubt received numerous solicitations from Life Insurance Brokers, Agencies, and Representatives offering you "Mortgage Protection Insurance."
What is Mortgage Protection Insurance? It is simply life insurance that is used to pay off your mortgage in the unfortunate even something were to happen to you or you spouse. That's it, plain and simple. It can come in any form, Traditional Term Life, Return of Premium Term Life, Universal Life, or Variable Life. But these days these mailers are designed to gauge your interest and then upon consultation if the life insurance representative you're talking with is doing what they're supposed to will present you a wide variety of options and educate you to help you make an informed decision.
Many people have prudently already taken into account their life insurance needs while family planning either with a qualified expert or on their own. Buying a house is a "triggering event" that usually creates a greater need for insurance.
Life insurance isn't rocket science and it's very simple to obtain quotes. There is so much competition out there from the A+ rated carriers such as AIG, ING, WRL, Prudential, Metlife, etc.. that consumers now can get so much more bang for their buck then they could even a few years ago that it makes sense to have a qualified professional review your current life insurance situation. At the very least it gives you a 2nd opinion and validates what you already have. Better case scenario you can save some money or get more coverage for the same premiums.
When deciding which form of Life Insurance is Best it's important to know the differences between the main forms:
Traditional Term Life Insurance: Usually 10, 15, 20, or 30 Year Term periods. Straight Death Benefit Coverage. The most inexpensive form of life insurance. At the end of the Period or "Term" coverage ends, although, many contracts have "conversion" priviledges.
Return of Premium Term Life Insurance: One of the newest form of Life Insurance. Works same as Term Life insurance but at the end of the term you get all of your money back - guaranteed and tax-free. This is hugely popular and makes a lot of sense in many cases and can really give you a "net zero" cost for life insurance.
Universal Life Insurance: Permanent Insurance where the premiums are put into an investment account and on a monthly basis a deduction is taken out of the investment account to pay for the cost of insurance. These plans are extremely flexible and benefits can usually be adjusted up or down.
Variable Universal Life Insurance: Works the same as Universal Life Insurance but the underlying investments consist of usually 30-50 subaccounts to choose from which are like "mutual funds." The benefit of investing in life insurance is that other than a Roth IRA, it is the only investment where it can grow "tax-free" and you can access the funds even the gains "tax-free" through policy loans.
Bottom line is that it's extremely important to make sure your life insurance is up to date. For a free review of your current life insurance and to obtain all of your life insurance options and comparisons, you can email me directly at Andy@AndyPolce.com and I will reply with all of your options and quotes, explain them to you and together we can decide which if any makes sense.
*Andy Polce is both a Registered Investment Advisor and a member of the Fellow Life Management Institute. He also holds Securities 6,7,63 and 24 licenses, Life, Health, and Variable Annuity licenses and is licensed in 35 states. He has sold and marketed life insurance since 1994.
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