Welcome These
presentations are among the best in the industry: honest,
straightforward, and informative. Concepts
are presented using common terms, easy and understandable.
In addition to key points of fact, the author presents
a balanced comparison of benefits and disadvantages so you
can make a sound, confident decision. If you'd like to know
more you can request a quote simply by clicking Here.
Private
Mortgage Insurance
and
Mortgage Protection Insurance
If
mortgage protection insurance is obtained through it's most
likely to be a decreasing term product. Decreasing term has
a premium that remains level but the benefit decreases over
time, usually collateral to the mortgage. Depending on the specific
insurance company and policy, it may pay the balance remaining
on the mortgage if there have been no changes in size or length
since inception, or if interest rates have not exceeded certain
levels. Often, an explanation of Mortgage Protection Insurance
includes a drawing similar to the one shown here...
Another
way of drawing the same product is presented below. At policy
inception an individual pays the same premium for ever diminishing
levels of coverage.
A
more appropriate product may be level term insurance.
As the name implies, level term insurance has a level premium
and a level death benefit, coverage does not diminish as decreasing
term does. Further, a term product purchased as an individual
policy is not tied to the mortgage. Completely portable, it
can be used as the survivors see fit. Plus, you choose
who the beneficiary is. This is in contrast to a decreasing
term product obtained through a lender: often the beneficiary
is the lender and the survivors have no options.
Comparing
Mortgage Protection (Decreasing Term) Insurance and Level Premium
Term...
How
Term Life Insurance Works
Term
insurance is temporary insurance. It's often compared
with renting rather than owning. Another good comparison
is flight insurance. While in flight the insurance is in effect,
but once the flight is over the insurance expires.
The
cost of insurance is based on several factors, including health,
life-style and age. As the age of the insured rises, the
cost of insurance (sometimes called the mortality charge) also
rises until eventually the cost may become prohibitive.
There
are two basic types. Increasing Premium, which renews annually
at a higher premium, and
Level Premium, which has a fixed premium for a specific number
of years, then increases in subsequent years. In each
type the premium will increase based on the individual's attained
age.
Age is a uniform consideration in all life insurance, however,
there are other factors including health and lifestyle. Changes
in either may effect renewability, including the possibility
of becoming uninsurable.
A
term policy may state a Guaranteed Rate for a certain period
of time: 1, 5, 10, 15, 20, 25, or 30 years. After the guaranteed
period expires the policy may automatically convert to an Increasing
Premium (Annually Renewable) product. The Renewal Rate
is the annual cost to renew the policy after the guaranteed
period has expired. Usually, no evidence of insurability
is required. Both the Guaranteed Rate and the Renewal
Rate are contractual.
Some
policies contain a provision for re-entry. The concept
is that at renewal, or after the policy has been in effect for
a certain number of years, an insurance company may reduce the
premium. An illustration will typically show the Re-entry
rate as less than the contract premium, however, it is not guaranteed.
Re-entry requires evidence of insurability. Essentially,
an individual is reapplying for the insurance. Since anyone
at anytime can readily apply for any insurance, such a provision
may appear to have greater use as a marketing tool than for
consumer benefit.
Return
Of Premium Term Insurance
Return
Of Premium Term Insurance offers the policyholder the opportunity
to receive a refund on a portion of, or the entire premiums
paid. After a certain number of years the policy begins
to have cash value. The amount is a percentage of premiums paid,
and is graduated so each year it increases. The cash value may
only be accessed through policy surrender. The guarantee is
to return the premium only, no interest is credited. Effectively
the net loss to the policyholder is the compound inflation rate.
Typically, this type of policy may cost substantially
more than comparable straight term.
Buying
Term
&
Investing The Difference
If
you're considering buying term & investing the difference
be aware that you're risking future insurability.
Before employing such a strategy answer four easy questions...
There
are two portions to this strategy: the term life insurance and
the investment vehicle.
Buying term and investing the difference requires calculating
the price difference between term and permanent life insurance
and systematically investing that difference. Failure to invest
on a consistent basis may eventually cause the strategy to collapse.
This
strategy also requires your investments to exceed any permanent
insurance guarantees which may be available, and that when the
term insurance expires the investments will have to made enough
to...
The
strategy of buying term and investing the difference may be
found in universal life, a form of permanent insurance.
For an excellent website on universal life insurance, click
Here.
Or, for whole life insurance, click Here.
Benefits
and Disadvantages
Of Term Insurance
Request
For Quote
We're
delighted you've decided to request information through our
service. From start to finish the process takes less than 5
minutes, that's it!
please
choose your destination
The best way to predict the future is to create
it, and a home has traditionally been one of the
best investments a person can make. For most
people, with the blessing of the home comes the
burden of the mortgage. Most often the single
biggest expense, it's only the ability to continue
making mortgage payments month after month that
keeps a family in their home. For Mortgage
Protection, Level Term Life Insurance creates options.
It can help assure that if you die before your mortgage
is retired, your family will have the time to make
reasonable decisions, rather than being forced to
act because of stressing to pay the mortgage.
They may choose to pay down the remaining balance,
potentially having a debt free home. Or they
may sell it, but doing so when they're emotionally
ready. Or they may just need some personal
time for grieving the loss of a loved one.
This protection helps give your family the means
to do so.
Life Insurance allows a person the opportunity to
shift a portion of the burden of risk from themselves
to a large corporation. With a piece of paper,
a drop of ink and pennies on the dollar, insurance
creates cash where none existed before, usually
far more than people can accumulate in a lifetime.
Further, life insurance is the only product that
provides a guarantee to pay a specific amount at
a specific time, typically at the very time when
financial resources may be strained.
Term life is inexpensive compared to other forms
of life insurance. Dollar for dollar you get
the largest death benefit amount with term.
And with
guaranteed level term insurance, once you've qualified
it doesn't matter how your health or lifestyle changes,
you're rates are guaranteed to stay the same for
the length of the policy. When considering
investing in a policy you should measure the outlay
against the weight of your assets, liabilities and
taxes. Life insurance offers a measure of
financial protection, it allows you the opportunity
to provide for your legacy with someone elses money:
namely, the insurance company's.
This
is the point at which I recommend you stop
and evaluate before proceeding any further.
Unless you have an academic interest in
the understanding of term life insurance,
further reading will be of limited value
until you resolve a few main questions:
Do you want to preserve your assets for your legacy?
On a month-to-month basis what's really in your
heart, the cash in lieu of the protection, or the
protection in lieu of the cash?
As inexpensive as term insurance is, still, is your
income enough to afford the cost without making
significant financial adjustments?
If
you can earnestly answer yes to these questions
then we may have a basis for moving forward. Crown
Financial Services can help you find the best
policy at the best price. As an independent
we're not limited to presenting just one company,
but can freely provide you with the resources
you need to make a sound, confident decision.
If you answered yes, then Contact
Us Today!
There are two insurance
products associated with a mortgage,
Private Mortgage Insurance and Mortgage Protection
Insurance.
Private
Mortgage Insurance
( PMI )
The
borrower pays for private mortgage
insurance but it doesn't protect
the borrower. Rather, it protects
the lender in the event the borrower
defaults on the loan. Private Mortgage
Insurance is often required when
the down payment is less than 20%.
The lender determines who will provide
the insurance, how much is required
and the criteria for discontinuing
the insurance (usually when the
borrower's equity is 20%).
Mortgage
Protection Insurance
( MPI )
Mortgage
protection insurance is typically
a term life insurance product. It's
purchased with the intention that
the proceeds will be used to retire
the mortgage in the event of unexpected
death, thus allowing the survivors
the potential of living in a debt
free home. Mortgage Protection Insurance
is not required. It's a free choice
of who will provide the insurance,
how much and for how long. Term
life insurance is relatively inexpensive.
Mortgage
Protection Insurance
(subject to limits
specified in the policy)
Tied To Mortgage
If Obtained Through Lender
Beneficiary Is Most Likely To Be The
Lender: Survivor Has No Options
Level Premium, Decreasing Benefit
Level
Premium Term
(subject to limits
specified in the policy)
Portable
May Choose Any Beneficiary: Gives
Survivors Options
Level Premium, Level Benefit
I How
long do you need life insurance coverage?
II Do you prefer
to rent or to own?
III Invest the difference
in what?
IV Will you invest without
fail?
Universal
Life Insurance
Your Money Buys
Life
Insurance and Opportunity
For
Protection
Cash
Value
Accumulation
BENEFITS
(subject
to limits specified in the policy)
Pure
Insurance Protection
Can Be Inexpensive.
Death Benefits Are Generally
Federal Income Tax Free.
DISADVANTAGES
(subject
to limits specified in the policy)
Pure Insurance Protection
Like Renting, Expires And Needs Renewing:
There's A Danger Of Becoming Uninsurable
When Term Coverage Ends.
