Mortgage Payment Protection via Life Insurance in Texas
When something happens, who pays the mortgage?
Four (4) Types of Mortgage Protection Life Insurance
Listed from low to high by price:
1)
Permanent, Whole Life - Final Expense, Critical Period Mortgage Protection Life Insurance:
up to 30 months of Principal, Interest, Local Property Taxes, and Homeowners Insurance
(PITI) payments
Critical Period Mortgage Protection Life Insurance buys time. This insurance is built for the
most vulnerable time following the event when a person is no longer able to pay or contribute
to paying the mortgage on a home. With this protection, surviving members avoid the sudden
pressure of 1) paying the mortgage and other expenses, 2) selling the home and relocating, 3) going through foreclosure and relocating, or 4) making some other arrangements. The lump sum proceeds from critical period mortgage protection life insurance--however many months in that policy--may also be flexibly used for funeral expenses, auto loans, and other needs.
Coverage Samples:
$3,300 x 10 months = $33,000
$3,300 x 20 months = $66,000
$3,300 x 30 months = $99,000
Age, Health, Lifestyle & Income Underwriting Prospects:
Preferred under age 66 - Standard under age 75 - Impaired under age 90
2)
30-year Term Life Insurance: 50% or 75% Mortgage Protection (possibly, for mortgage refinancing)
Sample Coverage: $390,000 x 50% = $195,000
Age, Health, Lifestyle & Income Underwriting Prospects:
Preferred under age 66 - Standard under age 75 - Impaired under age 90
3)
30-year or 15-year Term Life Insurance: Full/100% Mortgage Protection Insurance with or without a 50% or 100% Return of Premium (RoP) Cash Back Option (CBO)
A) Without a Return of Premium Cash Back Option,
the monthly premiums for one or two persons can be determined.
Age, Health, Lifestyle & Income Underwriting Prospects:
Preferred under age 66 - Standard under age 75 - Impaired under age 90
B) With a 50% or 100% Return of Premium Cash Back Option, the monthly premiums are more expensive, but in effect, the term policy becomes a cash value term policy because
premiums are returned (without interest); and with the 100% RoPCBO, if the insurer offers a 25-year premium term, a 30-year mortgage may be paid off in 25 years.
Sample Coverage: $390,000
^ Rate Band at $250K ^
One Borrower or Two Co-Borrowers Coverage Sample
for a 25-Year Payoff of a 30-Year Mortgage Term
Age, Health, Lifestyle & Income Underwriting Prospects:
Preferred under age 66 - Standard under age 75 - Impaired under age 90
C) If co-borrowers are approved for partial mortgage amounts totaling 100% of the mortgage amount, a 30-year mortgage may be paid off in 25 years and the total monthly premiums for two people splitting the mortgage coverage at amounts each under the full mortgage may be less expensive than the whole mortgage premiums carried by one person.
Coverage Samples:
$390,000
^ Rate Band at $250K ^
Two Co-borrowers Coverage Sample for a 25-Year Payoff of a 30-Year Mortgage Term and
a Lower Total Premium:
51%/49% or $198,900/$191,100
Age, Health, Lifestyle & Income Underwriting Prospects:
Preferred under age 66 - Standard under age 75 - Impaired under age 90
4)
30-/35-Year, Lifetime, 7-Year, or Variable Premiums
Indexed Universal Life (IUL) Insurance:
Primarily designed to provide a death benefit for beneficiaries while building accumulated cash value that the policy owner may access, for example, at age 61, as a living benefit through policy loans and/or withdrawals following a planned minimum 18-year cash value accumulation period (premiums can stop after year 30).
Tangentially/secondarily for full or partial mortgage payment protection
Higher Cash Value Than Term Mortgage Protection Life Insurance with RoP CBO
(Remember, term mortgage protection insurance does not have a cash value for you at the end of the term unless there is a Return of Premium Cash Back Option.)
To plan for more from an IUL, use our experts on the UniTrust Financial Group's Retirement Income Solutions Team applying advanced life insurance strategies.
An Index Universal Life (IUL) policy is designed to build over time tax-advantaged cash value (through allocations to accounts and/or strategic indexes where your allocation election/s experience no losses but gains may have participation rates and caps) which the policy owner may choose to access later in life via policy loans and withdrawals for significant expenses.
You know how money can run out before one retires--and you know how you can need a car and cannot buy one even when you have paid off the mortgage and no longer need mortgage protection?
Well, there is a way people age 61+ can have money for a car when the job market may no longer need them.
As an illustration, a 30-year-old primary wage earner and new policy owner might establish a cash value goal of $105,000 (at a monthly planned premium cost of $168 for 30 years for $251,000 of coverage, level death benefit) to help support their family's financial goals 30 years later. Loans and/or withdrawals could include helping two children with college loans, weddings, or first-home purchases (e.g., $35,000 for each child), while reserving approximately $35,000 at age 61 to help reduce consumer or medical debt, assist with the purchase of a retirement car and the rest could be income supplementation. Any remaining death benefit could help strengthen the owner's estate and provide a financial legacy to beneficiaries.
A more aggressive IUL strategy could involve choosing an increasing death benefit during the early funding years (which will likely raise the monthly premium) and during later years either 1) switch to a level death benefit (which lowers fees) or 2) lower the face value of the death benefit to cut administrative costs. Policyholders making larger premiums in earlier years, without creating a Modified Endowment Contract (MEC) might use the extra accumulated cash value in an IUL as part of a larger privatized banking or infinite banking strategy.
In this presentation, a high-priced IUL insurance policy, that can serve for mortgage payment protection, has stringent underwriting requirements.
Coverage Samples:
$390,000 (100%)
$250,000 (64%)
^ Rate Band at $250K ^
$195,000 (50%)
$156,000 (40%)
Age, Health, Lifestyle & Income Underwriting Prospects:
Preferred under age 66 - Standard under age 75
= = = = = =
Six (6) Additional Areas of Financial Solutions Using Advanced Life Insurance Strategies
from UniTrust Financial Group's Retirement Income Solutions Team and Account Managers:
1)
Life event/annual life insurance reviews for performance and coverage needs1)
2)
Mortgage and other debt reductions by using permanent life Insurance premium
overfunding under the modified endowment contract (MEC) limit to increase cash value in the policy
3)
Tax-aware, retirement income enhancement solutions
Know your pre-retirement - post-retirement income gap.
4)
Improving ability to support children and grandchildren to finance college educations,
weddings, first homes, emergencies, etc.
5)
Trusts & Estates planning for homeowners, especially in states where homes are at risk for the Medicaid Estate Recovery Program (MERP) because the home is in an Expanded Recovery state where the solution is likely an Irrevocable Medicare Asset Protection Trust (MAPT);
Texas is not an Expanded Recovery state.
Trusts & Estates planning is also recommended for mortgage protection life insurance
policyholders who are the last surviving parent and the death benefit is $25,000 or more.
Here, an Irrevocable Life Insurance Trust (ILIT) may be suitable for control over distributions, conflict mediation, and estate tax protection.
Use a Family Trust (Revocable Living Trust) instead of an Irrevocable Life Insurance Trust (ILT) if your combined assets remain safely below federal estate tax exemptions. A Family Trust provides crucial control over distributions, avoids probate, and provides flexibility to adapt to changing family needs, making it ideal for the vast majority of estates.
Can your existing Trusts & Estates plan be created, improved, or updated?
6)
New job? Have a previous employer's 401(k) that, for just two examples, can be protected from downside volatility or that can contribute to an increase in early funding of an IUL that can boost cash value accumulation for tax-free loans or withdrawals after the 18th year of the policy and beyond?
Independent Agent currently licensed in Texas
(Missouri is planned for no later than 4Q2026)
Stephen "Steven" Campbell
Field Underwriter and Life Insurance Broker
Mortgage Protection Life Insurance
and Indexed Universal Life (IUL) Insurance
Stephen S. Campbell & Associates:
InsuraTec, UniTrust Financial Group
and multiple insurance companies
SOME OF THE INSURANCE COMPANIES:
Permanent, Whole LIfe - Final Expense,
Critical Period Mortgage Protection Life Insurance:
American Home Life - Guidestar (younger insureds)
American Home Life - Patriot Series (older insureds)
Term Insurance for 50% or 75% of the Mortgage:
Americo
Term Insurance for 100% Mortgage Protection
with or without Return of Premium (RoP) Cash Back Option (CBO):
Americo
Index Universal Life (IUL) Insurance
for Estate Creation, Moderate Cash Value
and
secondarily, for Mortgage Protection
predominantly for policy owners below age 46, preferably below age 31,
or policy owners 46+ who pass underwriting and do not need the death benefit
with adult children below age 46:
Mutual of Omaha variable premiums, can stop at age 61
Americo only has 7-yr or lifetime premiums
For your mortgage payment protection
and Index Universal Life (IUL) needs,
contact me, Stephen "Steven" Campbell, at:
https://waterbearingfish.com/contact
Mobile/Text: 972-927-1250
Follow me on LinkedIn:
By Appointment (Central Time): M-F 4:30-6p; M, W, Th 7-8:30p, Sa & Sun 2-3:30p