When most people in the insurance industry bring up the topic of mortgage protection insurance, they're simply talking about buying a term life insurance policy to payoff of your mortgage in the untimely event that you die before you were planning to.
Yes, indeed there are some us who aren’t fortunate enough to be able to tell the exact date we shall make our grand exit.
What most agents in the life insurance biz won’t ever talk to you about, is that the likelihood of you dying is far less than the likelihood of you suffering a disability before you turn 65. See the chart below to get a better grasp of the increased risk of becoming disabled over an untimely death.
The increase chances of disability versus death prior to age 65:
So, we here at the insurance pro blog are going against the grain (I know you’re shocked) of conventional wisdom with regard to mortgage protection insurance. We assert that having a disability insurance policy to protect this risk is just as important as having a life insurance policy.
Life Insurance Is Not Mortgage Protection Insurance?
Now, it’s not likely that you’ll ever see us say you shouldn’t own life insurance. At least not as long as the earth is still spinning on it axis.
However, we do believe that too many agents, financial planners, and purveyors of financial pornography, disregard or pay very little homage to the increased risk of a disability ruining your financial future.
As a matter of fact I came across some statistics that really tell the story very accurately.
“In the last 20 years, deaths due to the “big three” (cancer, heart attack and stroke) have gone down significantly. But disabilities due to those same three are up dramatically! Things that used to kill, now disable” –National Underwriter magazine, May 2002
In fact, over the course of your working years, you are 3.5 times more likely to suffer an injury or sickness and need to file a disability claim than you are to die and have a life insurance need.
To further support those statements look at these numbers. I found this chart that compiles data regarding the percentage increase vs. decrease of four major diseases that are very common in the United States.
I know that none of this information is not uplifting, positive or otherwise delightful in any way but I’m merely pointing out the facts.
Mortgage Protection Insurance In Your Mailbox
Don’t be so convinced by one of the many mail solicitations you receive when you buy a new house or re-finance your existing mortgage, that life insurance is the only risk you need to be concerned with when thinking about protecting your family. *Hint: Those mail pieces are actually from insurance agents not your mortgage company, despite what the outside of the envelope has printed on it.
As usual, you need to ask more questions, do more digging, and make sure that you’ve covered all the risks involved.
The right disability insurance coverage protects your family’s home from foreclosure in the event that you can’t work due to a sickness or injury. You’ll pay a monthly premium just like you would for a term insurance policy. Only in this case, the policy pays if you lose your income because of a disability.
We're Pulling Back The Curtain
So, this begs the question…why do most agents ignore the discussion surrounding disability insurance?
Ahhhh, now we’re pealing the onion!
Basically, because none of them are trained in how to offer disability insurance, how it works or what’s available in the marketplace.
The other dirty secret–is that most agents are lazy and simply don’t want to go through the trouble of helping clients through the sometimes lengthy and nuanced process of underwriting a disability insurance policy. In other words, it's just too much work…or that's what they think anyway.
Honestly, a simple policy to cover your mortgage and other basic expenses is not complicated at all anymore.
Disability Insurance to Protect Your Mortgage Is Simple
As a matter of fact, at least one insurance company has a simplified disability product that doesn’t require income verification, has no paramedical exam required and just requires a brief telephone medical interview to get it completed. The policies are usually issued in a matter of days.
Of course there are limitations to this type of policy and it may not be the best solution in every case but it works quite well for mortgage protection insurance.
If this is a topic you’d like to learn more about or you think that this type of policy might serve your needs, please contact us to find out more. We’re always glad to help.
Do they ever verify income? The reason I ask is I have a lot of self-employed who write off income so I usually sell them accidental disability along with CI
Hi Sam,
Yes income verification is definitely a part of the process and deducting income when self-employed becomes a double-edged sword with respect to disability insurance underwriting.