by Guest » Tue Aug 31, 2010 08:47 am
I just wanted to make sure that my family members don't face any problems with our home even when I'm not there. So I got this mortgage life insurance. Now, the agent has come up with another offer - mortgage disability insurance. Is it really that important to us?
Posted: Tue Sep 07, 2010 06:02 am Post Subject:
So now the agent has made two sales for two different products and used one focal point of the OP's life to make those purchases seem important. It's a sales strategy.
And maybe next the agent will come back with a mortgage accidental death policy, as part of the sales strategy. And then an accident-only, hospital-only indemnity policy. And later add an at-home benefit for sickness. This is exactly why people get to the saturation point -- and believe they are being premiumed to death.
There's no doubt that many people could benefit from having "mortgage-only" life/disability coverage, compared to nothing at all. But if no agent has ever explored the concept of covering all/most of a person's total need with proper amounts of insurance, then the insured may be under the impression that the insurance will do more for him/her/heirs than the policy provides.
It's a sales strategy
Maybe so, but it's not one that I would use.
It's sort of like the whole mortgage mess that derailed the economy -- like the mortgage broker saying to folks, "OK, so you really want to live in a home that you can't afford. I can appreciate that -- I live in one like that, too. So here's what we'll do, we'll start you with a 1% note for 30 years, due in 12 months -- that way the payments are really low, and you'll qualify for the loan. A year from now, the payments will go up some, but we'll come back and refinance your loan for free, so you won't have to pay all the closing costs again. And with real estate values going up all the time, why you'll have great equity and that will lower your interest rate."
Sales strategy . . . sounds good in theory, and worked for a few years, but is just about 100% BS. And now the rest of us are paying the price for that.
We don't see "sales strategies" in homeowner's insurance that say, "Well, let's get started with 80% coverage, and in a year or so, we'll increase it to 90%, and once you get used to that, we can go ahead and increase it to the full 100%."
I acknowledged in my first response that there wasn't anything wrong with mortgage life or disability coverage. My concern was for the OP to understand that he needs to look at the big picture and evaluate what his true needs are and make sure those are covered. If he doesn't need the additional income a DI policy might provide, fine, then he doesn't need it. An agent with a "sales strategy" may also have a commission-perspective rather than a coverage-perspective, and the sales presentation could be rather myopic.
But if the vast majority of people with DI insurance had that kind of coverage (to pay only the loan payments), they'd be very sorry they didn't buy more complete coverage . . . as they're being displaced for other reasons for which money would have been the answer.
Posted: Tue Sep 07, 2010 10:18 am Post Subject:
It's a fine sales strategy if someone's job title is "mortgage disability salesman". It's a terrible purchase strategy for a person looking for protection. It's a terrible sales strategy for an insurance agent who is truly trying to do what is best for his clients.
Posted: Mon Sep 13, 2010 03:08 pm Post Subject:
It's a terrible purchase strategy for a person looking for protection. It's a terrible sales strategy for an insurance agent who is truly trying to do what is best for his clients.
Exactly. Just fewer words than I used.
Posted: Wed Dec 21, 2011 10:57 am Post Subject: Mortgage Murfreesboro
am working on a report in which all the banks giving loan for mortgage and in case of no return payment they made some hard decisions. What do you think about it? Is it right to not getting mortgage and vacate the house and take everything from the person..
Posted: Thu Jan 05, 2012 11:48 am Post Subject: mortgage chattanooga
Nowadays managing money is such a difficult task especially when you have limited income and unlimited expenses. In this case either you should cut down your expenses or you should find someone to give you money! If nothing as such happens, you will find yourself in trouble.
Posted: Mon Sep 17, 2012 08:30 pm Post Subject: Disability and homeownership
I have been on disability since 2009 and cannot work. I would really like to buy the home I am renting, having actually begun the process, and I will be able to. My concern is this: Will the government have any claim to my home in the event that I die before it is paid off (which is almost certain because of my disability), or can the mortgage be transferred to my kids? Both of my sons have said they would willingly take over the payments and keep the house if I died, yet neither of them have good enough credit that I would qualify using them as a co-signer.
Posted: Wed Sep 19, 2012 12:37 pm Post Subject:
The home will be a "recoverable" asset in the event you receive assistance for your health care expenses, including long term care, from MEDICAID, but not Social Security Retirement or Disability benefits.
Social Security Retirement and Disability benefits (and even SSI payments) are "non-recourse" payments -- the government will not come looking to recover that money.
If your concern is losing the property after your death, then don't "own" it in the first place. Put it into an irrevocable trust or title it in the names of your sons and pay the mortgage payments (up to $13,000 each per year) as "gifts" to your sons. If you are married, you and your spouse could each gift $13,000 -- $26,000 combined -- to each of your sons, for a total of $52,000 per year to both.
Not only does that escape gift taxes, it reduces your taxable estate -- and estate taxes will be coming back in a big way in 2013 if Congress fails to act in the remaining 13 weeks of 2012.
Talk with an estate-planning attorney and/or CPA for more information about this. If you do it right from Day One, you will avoid any estate tax liability on the value of the home, if any,
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