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Mortgage Life Insurance

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  • Avatar pslfhopeful 
    Participant
    Status: Resident
    Posts: 25
    Joined: 05/14/2016

    Hi everyone.  I’m unable to qualify for term life insurance due to chronic medical issue.  I do have guaranteed issue life insurance through work which is portable/convertible in the amount of ~$1.6M.

    Does anyone have experience with mortgage life insurance that might not require medical under-writing?

    Any medical association related group life insurance that I can qualify for that may not require under-writing?

     

    #206330 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7794
    Joined: 01/09/2016

    Typically, I do not recommend mortgage life insurance as it comes at a hefty premium and, instead, recommend clients add to their personal term life. Can’t happen in your situation, though (I’m sorry).

    The amount you currently have is significant for this stage of life – are you sure you need more? If so, you might plan to take out insurance for a few years only until you finish training and get on your feet, while aggressively paying down that mortgage (hopefully not very big, given that you’re a resident).

    Maybe others will have reco’s for coverage through professional groups, but it wil likely be limited to $250k or so w/o underwriting.

    Since you didn’t ask, I won’t comment on the advisability of buying a home in residency – but…

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #206350 Reply
    Liked by CordMcNally
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2503
    Joined: 01/03/2017

    What specialty? How far away are you from being done? Will your chronic medical condition limit your career or life span any? Your best bet may be to buckle down and bust your hump so you can self insure.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #206355 Reply
    Liked by ENT Doc
    Avatar pslfhopeful 
    Participant
    Status: Resident
    Posts: 25
    Joined: 05/14/2016

    Early in career, higher salary specialty.  2 years down on a 30 year fixed @ 4.5, ~660K remaining.  High savings rate, ~50% Net/33% Gross.

    What are the ballpark rates for Mortgage life insurance if we’re talking about this $660K remnant mortgage?

    #206482 Reply
    Michael @ BattDouglas Michael @ BattDouglas 
    Participant
    Status: Financial Advisor, Insurance Agent
    Posts: 80
    Joined: 04/13/2018

    Hello pslfhopeful.  Thank you for sharing about your situation.  We’d like to share one way to determine the amount of life insurance you may need. Think about the amount of income you’d like to replace if you passed away during your working years.  $1,000,000 of death benefit can provide a $50,000 income replacement for 20 or more years.  (This is an estimation for planning purposes to help NOT consume the nest egg of $1,000,000 too early in the plan.  The higher the annual withdrawals, the faster the nest egg will likely be consumed.)  As is true with all insurances, if you do put mortgage life insurance in place,  you can cancel it as you approach financial independence or do not need the coverage.  For the first 10-15 years of a mortgage, you are paying more interest than principal, so the debt stays somewhat level for those years.

     

    We are here when you need us.

    Michael Douglas CLU, CHFC, CFP with the BattDouglas Financial Group
    Direct Phone: (216) 470.2728, [email protected]

    #206803 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4392
    Joined: 05/13/2011

    It’s better than nothing. If it was all the life insurance I could get and I had a need, I’d probably buy it.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #206935 Reply

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