What's the best life insurance plan to cover a mortgage?

Answer:
Recent innovations in life insurance

and the decrease in term life insurance prices have nearly rendered the old fashioned mortgage life products obsolete.  You may still find some companies clinging to "decreasing term life insurance" and some build term life insurance with riders attached-- bells and whistles that add complexity and little value to their mortgage life plan.  What most people don't know is that...

the simplest solution is usually the best.  Level Premium, Level Face Amount Term life insurance lives on... and the affordability, flexibility, and wide range of companies available continue to make it the best choice for consumers protecting their families from the prospect of losing their home.  Decreasing term insurance, a term life insurance policy that decreases in value to mirror the reduction in mortgage principal over time, has also decreased in popularity and prevalence.  It's still out there... but over time, it's actually more costly to purchase this plan than plain old level term life insurance.  A few companies offer supposed innovations that bundle disability income plans and waiver of premium with a term plan.  But in reality... you can purchase a term plan almost anywhere and add these features.

The best choice on the market today, in my opinion, is an American General product called Select-A-Term.  It's the first of it's kind in that it offers customers the ability to choose nearly any length of term between 10 and 30 years.  It's specifically designed to cover loans for only the time you require.  Only have 28 years left on your mortgage?  Buy a 28 year Select-A-Term plan.  Plans like these have been offered in other countries for years-- it's a wonder why it took the United States so long to catch on...  The protection is affordable and is proving to be a smart addition to the American General portfolio.  Here are some key features:

*  Extended Issue Ages - Clients age 55 and above may be able
    to obtain level premium coverage into their mid-80s
*  6 underwriting classes: Preferred Plus, Preferred Nontobacco,
    Standard Plus, Standard Nontobacco, Preferred Tobacco,
    Standard Tobacco
*  Convertible to the earlier of the end of term period or age 75
*  Terminal Illness Endorsement included at no cost in approved
    states
*  Available riders: Accidental Death, Child Rider, Waiver of
    Premium, Terminal Illness Endorsement and Disability Income

After 10 year term life insurance, an approved applicant for this product has the option to purchase any term length up to 30 years with some quirky exceptions.  Eleven, thirteen, and fourteen year options are not available for purchase.  With the extended issue ages-- it's possible for a 67 year old to purchase a 21 year term life insurance plan.  This means coverage can be sewed up late in life and protection can be secured (in the non-tobacco health classes) until the ripe old age of 88.  With older Americans refinancing their homes after retirement, being in position to buy term protection instead of the more costly Universal Life and Whole Life plans, is a big deal.

Select-A-Term is brand new and will be hard to find on most Internet quoting engines unless a more common term length is selected (10 year term life insurance, 15 year term life insurance, 20 year term life insurance, and 30 year term life insurance).  But this will change quickly.  Several of the top Internet brokerages are hastily building out their websites to include this product, much to American General's delight.  For the time being... they're the only game in town when it comes to offering this unique innovation in mortgage life protection.

TrackBack URI for this entry