The Basics of Mortgage Protection Insurance Tips

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What are per stirpes and per capita?

Per Stirpes and Per Capita

When making your beneficiary elections on your Affordable Mortgage Protection Insurance application, you can choose to decide how the death benefit proceeds will be disbursed in the event of the death of your beneficiaries by choosing either a per stirpes payout arrangement or a per capita arrangement.

In a per stirpes arrangement, the children or remaining heirs of the deceased beneficiary will be given their portion of the death benefit proceeds by individual family branch to split evenly amongst themselves.

In a per capita arrangement, the children or heirs of all deceased beneficiaries will split the entire percentage of death benefit proceeds allocated to the deceased beneficiaries. This division is not done by branch, which means that all proceeds for deceased beneficiaries are pooled.

Per stirpes can leave some heirs of deceased beneficiaries with a larger portion of death benefit, while per capita makes sure that all the death benefit proceeds allocated toward deceased beneficiaries are split evenly amongst each of their heirs.

   
Can the insurance company exclude specific activities?

Exclusions

Mortgage Protection Insurance Costs are not as easy to adjust as the costs of other insurance policies. There are no deductibles to raise, no limits to lower, and no coinsurance costs to consider. If your Mortgage Protection Insurance Costs are high due to a hobby or occupation that you take part in, then one way to lower them is to allow any death caused by participation in that hobby or work to be excluded from receiving benefits.

This is not a good option for everyone looking for insurance. Excluding an activity that has a high likelihood of resulting in death could put your family in a dangerous financial position. But if you have other ways to cover a death during this activity, like with an accidental death policy, a small non-medically underwritten policy, or a group policy through work, then it could be a good alternative.

   
What if I can't afford the death benefit I want?

Prioritizing Your Death Benefit

Your Mortgage Protection Insurance Premium can be a big help in deciding what kind of death benefit your policy has. You may intend to have a death benefit that pays off your mortgage and all other debt, provides college tuition for all your children, replaces your salary for ten years, and provides a small pool of money for your spouse to retire with. However, all those intentions fly right out the window if they create a death benefit that is so large you cannot afford the Mortgage Protection Insurance Premium.

That's why it's important to consider your ultimate goal in terms of a death benefit and to prioritize all the categories within that ultimate goal. That way, if you can't afford to do everything you want to do with your death benefit, you know exactly which items to cut. This will make the process of applying for insurance much smoother and will ensure that your family's top financial priorities are covered.

   
Can I get a refund if I don't want my policy?

20-Day Free Look Period

It's impossible to know and understand all the terms, exceptions, exclusions, and limitations of your Mortgage Protection Insurance Coverage until you've actually been issued a policy. That means that the insurance company you buy your Mortgage Protection Insurance Coverage from must give you a certain period of time after your policy has been approved and mailed to read the policy and decide whether or not you want a refund. This period is called the 20-day free look period.

The 20-day free look period begins once your policy has been delivered to you. There is a form you'll be asked to sign once you receive the policy that will show the date it was placed in your hand. As of this date, you'll have 20 days to read all the terms and decide whether or not you wish to return your policy with a letter asking for a refund.

   
If my policy lapses, can I ever get it back?

Policy Reinstatment

If your insurance policy lapses as a result of non-payment of premium, you may not be permanently out in the cold. You can apply for policy reinstatement, which might allow you to reinstate your policy with the original Mortgage Protection Insurance Cost. Reinstatement is an attractive option for many because as they have increased in age, their Mortgage Protection Insurance Cost in a new policy has also increased.

When you attempt to reinstate a policy, you'll be asked to complete an application that discloses whether or not you've had a change in health since your policy was issued. In addition, you'll be asked to pay your past-due premiums and any penalty assessed by the insurance company. The underwriters will review your application for reinstatement and may approve it, as long as your health has remained stable. If your health has changed, you may be declined or assessed an additional premium charge.

   
Will a bank draft payment help me avoid lapsing?

Avoiding Policy Lapse with Bank Drafts

Your Mortgage Protection Insurance Premium will be due either monthly, quarterly, semi-annually, or annually depending on the premium election you make when applying for the policy. In order to avoid a policy lapse, you must have the payment in by the end of the grace period noted within your policy. It's important that you review your individual policy in order to find your actual grace period information.

The best way to avoid a lapse when paying monthly is to sign up for a monthly bank draft (also called a PAC). PAC payments are generally scheduled a few days in advance of your premium due date and offer the most consistent method of avoiding a policy lapse when paying monthly. There is no concern about mail time, non-mail holidays, or missing checks.

In order to sign up for monthly PAC payments, you'll need to send a voided check to your insurer and complete their pre-authorized checking withdrawal form.

   
Can anyone call in and discuss my Mortgage Protection Insurance Policy?

Mortgage Protection Insurance Policy Privacy

Often, if you have someone call your life insurance company on your behalf to talk about your Mortgage Protection Insurance Policy, the representative from the insurance company will be unable to speak with them in detail about your policy without having verbal permission from you. The reason for this is that your Mortgage Protection Insurance Policy is governed by the same privacy rights and guidelines as all your other financial accounts. Just like your credit card company cannot give out private information to a strange caller about your balance and payments, neither can an insurance company about your Mortgage Protection Insurance Policy.

If you ask your spouse to call in with questions about your policy, it may frustrate you or them when the insurance company is unable to give them any information or answer their questions. Remember, however, that this is done to protect you from unauthorized people calling to get information that you don't want them to have. Ask your insurance company if they have any forms that you can complete and notarize to give your spouse or any other individual permission to speak with them when they call.

   
Are Mortgage Protection Insurance Plans covered under HIPAA?

HIPAA and Life Insurance

Confidentiality of your personal information and health history is a big concern, especially in these days of instantaneous online information delivery. The Health Insurance Portability and Accountability Act (HIPAA) was passed as a means of protecting your private health information as it passes electronically from entity to entity. Insurance companies that issue Mortgage Protection Insurance Plans are not covered under HIPAA, and neither is the Medical Information Bureau (MIB). However, that does not mean that they have no obligation to keep your personal health information private.

Instead of HIPAA, your personal health information with your Mortgage Protection Insurance Plan insurance company and MIB are protected under the Privacy Act. The Privacy Act has certain protocol and requirements that your life insurance company must follow when discussing or disclosing your medical information. They will provide you with a Privacy Act notice so that you understand the specific boundaries they must follow.

   
What is an adverse action letter?

Adverse Action Letter

When you apply for Mortgage Protection Insurance, if the insurance company you apply with is a member company of the Medical Information Bureau (MIB), they'll transmit coded information to MIB about your health, just like other insurers have. If the company receives information from your MIB that leads them to decline your application for Mortgage Protection Insurance, they'll send you an adverse action letter.

An adverse action letter is not intended to disclose to you what information has been found on your MIB report; instead, it's used to let you know that information on your MIB file lead to this decision. That letter will give you the information that you need in order to contact MIB and get a copy of your report. This will help you understand what information lead to your decline and, if it's incorrect, how to fix it.

   
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William Pirraglia