Life Insurance With Cancer: Getting A Mortgage Covered

Getting a mortgage can be a stressful process, and this is only amplified when dealing with a cancer diagnosis. While it is still possible to get a mortgage with cancer, there are many factors that can influence your ability to do so. This includes the type of cancer, the stage of cancer, and your prognosis.

When applying for a mortgage, lenders will want to know if you can pay back the loan. This means they will ask questions about your income, assets, and expenses. If cancer has impacted your ability to work, this may affect your eligibility for a mortgage. Additionally, lenders may require you to protect the loan with insurance, which can be more difficult and expensive to obtain with a cancer diagnosis.

This is where mortgage life insurance comes in. Mortgage life insurance is designed to pay off the remaining balance on your mortgage upon your death. This can be useful for dependents or a spouse who wishes to stay in the home but may not be able to afford the same mortgage payments. However, it is important to note that mortgage life insurance is typically more expensive for the level of coverage provided, and the cost per dollar of coverage increases over time.

Before purchasing mortgage life insurance, it is recommended to check if you already have insurance coverage that meets your needs through your employer or another policy. Shop around and carefully review the terms and conditions of different insurance products to ensure you are getting the best option for your situation.

Mortgage life insurance vs term or permanent life insurance

Overview

Mortgage life insurance and term or permanent life insurance are both designed to help protect your mortgage in the event of your death. However, there are some key differences between the two types of insurance that you should consider when deciding which one is right for you.

Coverage

Mortgage life insurance is designed solely to pay off your mortgage in the event of your death. The coverage amount will decrease over time as you pay down your mortgage. With term or permanent life insurance, on the other hand, you can choose a coverage amount that meets all of your family's needs, including paying off your mortgage, replacing your income, covering your children's tuition fees, and paying for burial expenses.

Beneficiaries

With mortgage life insurance, the death benefit is typically paid directly to the lender to pay off the remaining mortgage balance. This means that your family will benefit by having the loan paid off, but they will not receive any money directly. In contrast, term or permanent life insurance allows you to choose a beneficiary, such as your spouse or child, who will receive the death benefit directly and can use the money as they see fit.

Cost

The cost of mortgage life insurance is based on the remaining balance of your mortgage loan, the time left on the loan, and your age. The premium generally remains the same even as you pay down your mortgage and owe less over time. Term life insurance takes into account many more factors, including age, gender, health, smoking status, occupation, and family history. Term life insurance is often cheaper for the amount of coverage you buy, especially if you are healthy.

Flexibility

Mortgage life insurance is designed for one specific purpose: to pay off your mortgage. Term life insurance, on the other hand, offers much more flexibility. It can be used to cover a broad range of financial obligations and can be renewed or converted to permanent insurance in many cases.

Underwriting

Mortgage life insurance typically requires minimal underwriting, making it easier to get approved. Term life insurance, on the other hand, goes through a more rigorous underwriting process, including a medical exam. This means that term life insurance may be harder to qualify for if you have health issues or other factors that could increase your risk.

Term life insurance is generally considered a better option than mortgage life insurance because it offers more flexibility, coverage, and control over how the death benefit is used. However, mortgage life insurance can be a good choice for those who cannot afford term life insurance or who have health issues that make it difficult to qualify for term life coverage. It is important to carefully consider your own financial situation and needs when deciding which type of insurance is right for you.

The effect of cancer history on insurance premiums

A history of cancer can have a significant impact on the cost of insurance premiums. While it is still possible to obtain life insurance after a cancer diagnosis, the premiums are likely to be higher due to the increased risk associated with the disease. This is especially true for more aggressive or advanced cancers, as well as for individuals with other health complications.

The type of cancer and its severity play a crucial role in determining insurance eligibility and premiums. Insurance underwriters are aware that certain types of cancer have higher survival rates, and this can work in the patient's favour. For cancers with a lower death rate, such as melanoma, patients may be accepted for a policy but placed in a lower tier, resulting in higher premiums.

When applying for life insurance, insurance companies will consider various cancer-specific details, including the type and stage of cancer, the treatment plan and response, and the patient's family history of cancer. This information helps them assess the level of risk and determine the appropriate premium.

The timing of the cancer diagnosis also matters. For cancer survivors who are in remission, the longer it has been since their diagnosis, the fewer restrictions they will face when applying for life insurance. Additionally, maintaining good overall health can improve the chances of obtaining coverage, as it demonstrates lower risk to the insurer.

It is worth noting that some types of life insurance, such as guaranteed issue life insurance and burial insurance, do not require a medical exam and may be more accessible to cancer patients. However, these policies tend to come with higher premiums and coverage limits.

When considering life insurance options, it is essential to be truthful on medical evaluation forms. Providing false information can lead to denial of coverage, increased rates, or even accusations of fraud.

The ease of access to insurance for cancer patients

Being diagnosed with cancer does not mean that you will be unable to access insurance. However, it is important to note that it may be more difficult to obtain certain types of insurance, such as life insurance, and that premiums are likely to be higher. Nonetheless, there are still options available for cancer patients seeking insurance.

Life Insurance Options for Cancer Patients

Group life insurance, burial insurance, and guaranteed life insurance are often the easiest types of life insurance for cancer patients to obtain. These policies typically do not require a medical examination and are generally more accessible. However, it is important to note that these policies may come with higher premiums and coverage limits.

Factors Influencing Insurance Access

The type of cancer and the patient's overall health will influence their ability to obtain insurance. Insurance underwriters consider the survival rate and severity of different types of cancer. If a patient has a higher chance of surviving, they are more likely to be approved for insurance. Additionally, if a patient has other health complications, they may find it more difficult to obtain coverage.

Disclosure and Transparency

It is crucial for cancer patients to be truthful and accurate when disclosing their medical history and current health status. Providing false information can have severe consequences, including denial of claims, cancellation of the policy, or accusations of fraud.

Seeking Professional Advice

Cancer patients seeking insurance are advised to consult with knowledgeable insurance agents, brokers, or financial advisers. These professionals can provide guidance on the different types of insurance available, help compare policies, and ensure that patients make informed decisions based on their specific circumstances.

Mortgage Life Insurance

Mortgage life insurance is specifically designed to pay off the policyholder's mortgage in the event of their death during the policy term. This type of insurance offers peace of mind to beneficiaries by eliminating their mortgage debt and providing access to more equity in the property. However, it is important to consider that the death benefit decreases over time as the mortgage balance is reduced, and beneficiaries cannot use the payout for other expenses.

The role of financial advisors in getting mortgage life insurance

Financial advisors play a crucial role in helping individuals and families secure their financial future and protect their assets. When it comes to getting mortgage life insurance, particularly in cases where the client has cancer, the role of a financial advisor becomes even more significant. Here are some key aspects of their role:

• Expert Guidance: Financial advisors are well-versed in the complexities of mortgage life insurance policies. They can explain the different types of insurance available, such as term or permanent life insurance, and help clients understand how these policies interact with their mortgage. This is especially important for clients with cancer, as they may face unique challenges in obtaining insurance and need to be aware of their rights and options.
• Needs Assessment: A financial advisor will conduct a comprehensive assessment of the client's financial situation, including their assets, liabilities, income, expenses, and future projections. This is crucial for determining the appropriate level of mortgage life insurance needed to protect the client's home and dependents in the event of their death.
• Product Selection: With a thorough understanding of the client's needs, financial advisors can then navigate the market to find the most suitable mortgage life insurance products. They can explain the costs, benefits, and limitations of each option, ensuring that the client makes an informed decision. This includes helping clients with cancer to identify insurers that cater to their specific needs and understanding the impact of their medical history on policy terms.
• Risk Management: Financial advisors assist clients in managing risks effectively. In the context of mortgage life insurance, they can help clients mitigate the risk of their dependents losing the family home due to an inability to continue mortgage payments. This is particularly relevant for clients with cancer, who may face higher risks and uncertainties regarding their health and financial stability.
• Claims and Payouts: Financial advisors also guide clients through the often complex process of making insurance claims and understanding payout structures. This is vital for mortgage life insurance, where the beneficiary is typically the mortgage lender, and the process may differ from other types of life insurance.
• Ethical Advice: Financial advisors are expected to act in their clients' best interests, providing unbiased and trustworthy advice. They can help clients navigate the challenges of obtaining mortgage life insurance with pre-existing medical conditions, such as cancer, ensuring that clients are treated fairly and their rights are protected.
• Long-Term Planning: Financial advisors take a holistic approach to their clients' financial well-being. They can integrate mortgage life insurance into the client's overall financial plan, ensuring it aligns with their short-term and long-term goals. This includes considering other aspects, such as retirement planning, estate planning, and investment strategies, which may be particularly important for clients with cancer.
• Emotional Support: Discussing life insurance can be emotionally challenging, and some clients may hesitate to address the topic. Financial advisors provide a supportive environment and help clients confront these difficult conversations. This is especially valuable for clients with cancer, who may be dealing with significant stress and uncertainty.
• Referrals and Collaborations: In cases where the financial advisor does not directly sell life insurance products, they can provide referrals to qualified insurance professionals. They may also choose to collaborate with insurance experts, ensuring that their clients receive specialized advice while still benefiting from the advisor's overall wealth planning expertise.

In summary, financial advisors play a pivotal role in helping clients navigate the complex world of mortgage life insurance, especially when facing health challenges such as cancer. They provide expert guidance, risk management, and emotional support, ensuring that clients make informed decisions to protect their families and assets.

The pros and cons of mortgage life insurance

Mortgage life insurance is an optional product that pays off the remainder of your mortgage upon your death. It is usually offered when you take out or renew a mortgage, but it is not a requirement for approval. Here are some pros and cons to help you decide if mortgage life insurance is right for you.

Pros:

• Guaranteed policy acceptance: You can't be denied an MPI policy based on your health condition, which benefits those with serious health problems or pre-existing medical conditions.
• No underwriting required: Most policies don't require a medical exam or blood sample, making it a valuable option for high-risk homeowners.
• Peace of mind: Knowing that your mortgage will be paid off can help you and your family sleep better at night.
• You don't have to die to benefit: Unlike most traditional life insurance policies, mortgage insurance often offers coverage if you become disabled or unable to work.

Cons:

• Decreasing benefit: Mortgage life insurance features level premiums with a decreasing death benefit, as the payout is generally fixed to the mortgage principle. This means the policy's value decreases over time as you repay your loan.
• Benefits the lender more than the insured: The mortgage lender is the beneficiary, so your family won't see any of the money from the payout.
• No control over the settlement: The life insurance settlement is automatically sent to the bank to cover the mortgage terms, so you can't choose how the money is used.
• Expensive coverage: Mortgage life insurance premiums are often expensive for the amount of coverage provided, and you may receive much less coverage over time as you pay down your mortgage.

Frequently asked questions