Here they are, ladies and gentlemen, the top 10 Hard-to-Find but Must Have Features on your Mortgage Protection Policy (by the way, if anyone sees Dave Letterman borrowing this list, let me know).
1. Choice of Beneficiary
If you have a mortgage protection program through the lender that holds your loan, you won't have a choice in the matter of beneficiary. The lender will be the beneficiary. It is important that you be able to choose your beneficiary so they can determine what to do with the proceeds: whether to pay the mortgage off or invest the money and make mortgage payments monthly and have money for other needs.
This is crucial. If you refinance, or buy a new home your plan should go with you. This allows you to put the policy in your suitcase and move it with you wherever you go and apply it to your next home. The reason this is important is because you won't ever have to qualify for another program again (but maybe just tweak it). Most mortgage protection programs are attached to your actual loan. If you sell or refinance, you'd have to get mortgage protection all over again. You want a program on which the protection is on you and you don't have to worry if it's there 20 years from now.
3. Death Benefit Remains Level
This is probably my biggest gripe about most programs. The benefit should not reduce over time. But most mortgage protection plans available today in the marketplace are decreasing terms. This means you pay the same amount in premiums but your coverage goes down every year with you mortgage balance (although your premiums don't decrease).
If you are going to pay the same premium for 30 years, you should have the same coverage amount, so that even in the 29th year of your mortgage loan, should you need your benefit, you still have the full face amount available.
4. Disability Payments
Will it pay your mortgage payments for you if you become disabled for a period of time? This is a feature available and very cost-effective by designing into the mortgage protection plan. Typically found with a 90-day waiting period with a 2-year benefit or 5-year benefit. Keep in mind your disability at work only pays 60-70% of your normal income. If you think things are tight with 100% of your pay, imagine if 30% gets chopped out. You will be grateful for this benefit.
5. Waiver of Premium
By the way, if you do become disabled, not only will you need some extra money to help with your reduced paycheck. It'd be nice if some of the bills would just stop coming altogether. This feature will pay your policy premium for you if you become disabled.
6. Money-Back Option
THIS IS (BY FAR) MY FAVORITE FEATURE! The Money-Back feature will repay you ever single dime you've paid into the policy at the end of your term if you never used the benefit. It's a real 'win-win' for you. Worst case scenario, you need the protection, and you're covered. If never had a need for the benefit, you get all your money back. Either way, you are insured and assured.
Who knew that insurance companies could get something right ?!
7. Critical Illness
This pays up to 100% of your policy's face amount for a covered critical illness such as stroke, heart attack, cancer, and many more serious illnesses. The goal is to help you survive something like one of these common and potentially fatal occurrences. Typically when something like this happens, it can wreak havoc on your financial resources. What if the last thing you had to worry about after suffering a devastating illness was how both the mortgage and mounting medical bills would be paid?
8. Unemployment Waiver
This will waive your policy premiums for a period of time if you become unemployed. Wouldn't be nice if everything made as much sense as this? Obviously if you were working, you could pay. This is an awesome feature.
9. Non Borrower Coverage
This is just plain common sense. Unlike restrictive options from the lender, anyone with an insurable interest can be covered on this program, even if his or her name is not on the mortgage, and even if he or she is not a spouse. Meaning, if you kept your better half with terrible credit off the loan, they can still be added to the mortgage protection plan. Many plans insure only those named on the mortgage loan.
10. Complete Coverage
The benefits of this program are paid, in the event of death or disability, whether the cause is accident or sickness. Be careful: there are a lot of mortgage protection policies out there that pay off ONLY in the event of a covered accident.
Okay, so is there a plan out there with ALL these great features I've been harping about?
Of course, there is. Otherwise I wouldn't be harping so much. It's the same coverage I have on my own home and is available to everyone. Just do your research.
Please note availability may vary from state to state.