Life insurance and mortgage life insurance

There are two main types of life insurance:

1 – Normal life insurance that in the event of death pays the insurance amount specified in the policy to the beneficiaries. For example: a 40-year-old couple holds life insurance in the amount of one million NIS. In the event of the death of one of them, the remaining spouse will receive a million NIS from the insurance company.

2 – Mortgage life insurance is insurance made at the request of the mortgage bank. In the event of death, the mortgage will be liquidated (cancelled), in such a way that the insurance amount specified in the policy will be transferred to the bank. Unlike regular life insurance where the insurance amount remains fixed, in mortgage life insurance the insurance amount decreases as the mortgage settlement balance decreases due to the monthly repayments. The insurance amount is updated once a year.

While for the 30-year-olds mortgage insurance for a couple in the amount of one million NIS will cost about 70 NIS per month, similar insurance for the 65-year-olds who have 500 thousand NIS to pay back will cost about 1000 NIS per month. Why such a significant gap has arisen and how costs can be reduced, in the article before you.

Life insurance for a mortgage may turn over the years from a marginal and small expense to a very large and heavy expense.

While young people in their 30s, who are generally healthy, will pay around NIS 70 a month for mortgage life insurance, people aged 65 will already pay around NIS 1000 a month for the same mortgage life insurance after they have already managed to repay half of the mortgage and are left with half a million NIS.

Today you can see a wide phenomenon of more and more people, who choose to take out life insurance at relatively older ages, due to various reasons such as starting a family at a late age, a desire to improve housing conditions, buying an apartment around the age of 50 and more. For example, a person at the age of 50 who takes out a mortgage for 30 years is required to pay life insurance until the age of 80. At the age of 65, the cost of the insurance will be a very heavy expense for him since it increases with age. The reason for this is that, despite the decrease in the insurance amount, which decreases as the balance to be paid off the mortgage decreases, the effect of the increase in the age of the insured is greater. In addition, the cost of insurance may become more expensive due to a health condition.

When you want to take out life/mortgage insurance, you fill out a medical questionnaire that includes questions such as:

– Have you been hospitalized in recent years?

– Do you suffer from any disease such as diabetes, heart disease, cancer and more?

– Are you of a normal weight?

– Do you smoke?

Considering the information gathered from these questions, the insurance company determines the premium (the monthly cost of the insurance). Diseases that significantly affect the price of life insurance/mortgage are heart disease, active cancer and diabetes. All this, of course, depending on the specific situation of the insurance candidate.

Insurance companies offer policyholders discounts on base prices, while most insurance companies usually give discounts that decrease over the years. Most of them give discounts of up to 60% which gradually decrease every year and usually end after 6 years, so that over the years there is a significant increase in premiums (insurance prices).

The cost of life insurance for a 30-year-old non-smoker on a million NIS before discount is 56 NIS in the cheapest company and at age 65 the same insurance cost will reach 839 NIS in the cheapest company before discount.

Women’s premiums are about 30% lower than men’s since women’s life expectancy is higher than men’s. It is important to note that the premium for non-smokers is lower than for smokers by about 45% due to the risk of smoking.

Anyone over the age of 55 or defined with various medical problems should know how to purchase a policy in a correct and responsible manner, when there are various parameters that can help in the matter: – It is recommended to

contact a professional, experienced insurance agent with experience in the field, who specializes in life insurance, and in particular in everything related to medical underwriting. An insurance agent can help significantly reduce the monthly cost of life insurance, as he has much more leverage on the insurance companies and much more power and influence to fight against them if necessary. In addition, the insurance agent will be able to make changes to the policy by transferring life insurance to another insurance company over the years and can obtain new and significant discounts.

– A reliable and true health declaration must be provided. At the same time, you can use an experienced insurance agent who knows how to formulate the answers correctly.

– A comprehensive and accurate market survey of this type of policy must be done, since substantial differences can be found between the various insurance companies.

– When receiving the price offer, it is recommended to check not only the price you receive in the coming year – two years, but also in the following years. Many insurance companies give very high discounts that expire within a few years. It so happens that the offer is very attractive for a few years, but after the discount drops, the price of the insurance increases significantly.

We contacted Baaz Naor, a veteran insurance agent specializing in life insurance and mortgage life insurance for the 55+ and people with health problems and chronic diseases, in order to understand how much insurance costs can really be reduced.

“Those who have a disease such as diabetes, cancer or heart disease, are required to pay a very large and heavy cost,” notes Beaz. “In these situations, the differences between the insurance companies are very large, when the discount can be very significant. My opportunity to contribute to older insureds and those suffering from health problems is much more significant than to young and healthy people, since even if they discount the policy by 30%, it is about a 20 shekel discount per month (because the initial premium is around 70 shekels per month), compared to the hundreds of shekels per month that can be discounted for older people.”

“I work with all the insurance companies in Israel, which allows me to check with several insurance companies – one may be very tough and in contrast another insurance company will be very easy. You can find the insurance company that is easier on a specific health issue and also on the age issue – when there are insurance companies whose insurance costs for older people are relatively easier.”

There are insurance companies that give good conditions to older people and those with health problems that allow them to do preliminary underwriting, before committing to the insurance company. That is, you send the insurance company an offer that includes all the relevant data regarding the requested insurance and the insurance candidates (including a health declaration and relevant medical documents) and receive an estimate from the insurance company regarding the increase in the expected price according to the data received. All this before the details of the payment methods are transferred to the insurance company.