Decreasing Benefit and The Possibility of Increasing Future Need

Mortgage Protection Life Insurance is issued to you with the death benefit that you initially apply for. Your premiums and underwriting requirements are all based on that initial amount you have applied for, and your rates are locked in for the entire term of the policy and can not increase—even if you become ill or are diagnosed with a terminal disease.

Over time, as you pay down your mortgage principal, you can reduce the death benefit of your Mortgage Protection Life Insurance. Should you decide to get an equity loan at some point during the term, it is important to remember that the death benefit of your policy cannot be increased.

Since an increase of your death benefit would result in additional financial risk to the insurance company, any additional loans or death benefit you would like to request must be applied for under a new policy. You will be charged premium rates based on your age and health at the time of the new policy.

When Beneficiaries Predecease the Insured

When you apply for your Mortgage Protection Life Insurance policy, you will be asked to name a primary as well as contingent beneficiary. The primary beneficiary is one who you ultimately want the Mortgage Protection Life Insurance death benefit to go to in the event of your death. The contingent beneficiary is the person you would like the death benefit of your Mortgage Protection Life Insurance policy to be given to if the primary beneficiary dies before you.

If you do not name a contingent beneficiary and the primary beneficiary dies before you, then the proceeds of your Mortgage Protection Life Insurance death benefit will be awarded to your estate. Additionally, if you have named a contingent beneficiary and both the primary and contingent predecease you, the Mortgage Protection Life Insurance death benefit will be awarded to your estate. Once in your estate, the executor of your estate will decide what is done with the death benefit proceeds.

Who Owns the Life Insurance Policy?

Your Mortgage Protection Life Insurance policy will have an insured, an owner, and a beneficiary. You will be the insured on your policy, and you may also be the owner; however, you may also allow someone else to be the owner of your policy.

Not just anyone can take out and own a Mortgage Protection Life Insurance policy on your life. In order for the policy to be issued, you must sign off on the application and give permission for the Medical Information Bureau report to be accessed. Additionally, there must be an insurable interest on the part of the policy owner. A neighbor or friend might not have an insurable interest in you, but a boss whose company’s success relies on you, your spouse, or your children do.

Only the owner of your policy has the authority to make changes. If you are not the owner of your own Mortgage Protection Life Insurance policy, you will not be able to change your beneficiary or the owner.

The Free Look Period on Mortgage Protection Life Insurance Policies

Insurance policies are not like clothes that you purchase at the mall. With mall purchases, you can usually return the purchase with a receipt within a certain number of days and get a refund. Because Mortgage Protection Life Insurance policies offer the benefit of full coverage at the moment that your policy is approved and the premium is paid and received by the insurance company, there is no limitless refund period.

Mortgage Protection Life Insurance policies do offer a twenty-day free look period. The twenty-day free look period on your Mortgage Protection Life Insurance policy affords you twenty days to review your actual insurance policy and decide whether or not to keep it. After reading through the policy, if you believe the policy is not what you were looking for, you have the right to send it back for a return of your premium paid. In order to get the refund, you must follow the insurance company’s instructions.

Can Beneficiary Elections Override the Will?

Sometimes, all the paperwork required to put your estate in order can be confusing. There are wills to write, insurance policies to buy, estate executors to name, trusts to create, and so much more. Often, Mortgage Protection Life Insurance policyholders forget who they have named as primary and contingent beneficiaries on their Mortgage Protection Life Insurance policy. As a consequence, they sometimes give instructions in their will about payment of the Mortgage Protection Life Insurance death benefit proceeds that contradict the beneficiary instructions written in the policy.

Because your Mortgage Protection Life Insurance policy is a contract between you and the insurance company, the election for beneficiaries you make in your will can not override those made in the Mortgage Protection Life Insurance policy. If you name different beneficiaries in your will than are on the policy, the insurance company will pay a benefit only to those beneficiaries named on the policy. In order to officially change the beneficiaries of your policy, you must complete the correct insurance company forms.