Critical illness insurance: Mortgage protection

Having a mortgage plan with a critical illness provision might protect them not only if they die, but if they live. It can have provisions like optional hospital indemnity benefits to provide a daily benefit when they are hospitalized to help pay ongoing lifestyle expenses. Or a return of premium benefit so if they are diagnosed with a covered critical illness during the waiting period or die while this coverage is in force their family gets all the premiums paid — less any benefits paid or due of course — and these premiums paid are returned to the family.

So what are the questions you can ask your clients?

• What is your largest asset?
• What is your greatest debt?

My experience is most people would probably agree that the largest asset and greatest debt they have during their lifetime is the mortgage on their home.

The Commissioners Standard Ordinary Mortality Table shows that when a 35-year old married couple purchases a home there is a 47% chance that one spouse will not survive to the end of a 30-year mortgage. And the average non-smoker male who purchases a home at age 35 has roughly a 1 in 5 chance (about 20%) of dying before the end of a 30-year mortgage.

So the question is, how would an individual keep up with the regular monthly bills (mortgage payments, utilities, etc.) if he or she was diagnosed with a critical illness and was unable to work for a period of time? How would this individual cover all of the unexpected costs associated with critical illness and still keep up with the mortgage payments?

The Kaiser Family Foundation says the chances of you surviving a critical illness are higher than ever.

• The percentages of surviving a heart attack have improved 24% since 1950.
• The percentages of surviving cancer have improved 30% since 1950.
• The percentages of surviving a stroke have improved nearly 50% since 1950.

So by packaging a critical illness provision with their mortgage insurance plan you help them ensure they have money that can be used to help pay indirect costs such as;

• Rehabilitation – stroke survivors generally need some type of rehabilitation i.e. speech, walking, feeding themselves.
• Home health care needs – individuals are released from the hospital much quicker than ever before.
• Loss of income – could be income lost before disability income begins or from a family member caring for the individual.
• Home modification – wheelchair ramp, door widening or bathroom modifications.
• Experimental treatment – that might increase your clients chances of survival but is not covered by their health plan.
• Child care, housekeeping – needs your client may have during recuperation.
• Transportation and lodging – for family members during treatment – Chances are an individual suffering from a critical illness will not want to be alone if going out of town for treatment.

So, whether your client dies or survives a covered critical illness, the financial benefits of each product can help protect their largest asset …their home.

It’s a conversation whose time has come.

See also:

• Questions we should ask about the Neasham case
• Sell fixed annuities? Think outside the box.
• Spinning the wheel of fortune