What is Mortgage Protection Insurance?
Mortgage protection insurance, which is also known as mortgage payment protection insurance or mortgage life insurance, is a type of life insurance that helps protect your family’s financial security by paying off your mortgage if you die, become disabled or lose your job.
Though the two are often confused, mortgage protection insurance is not the same thing as private mortgage insurance. Private mortgage insurance is insurance banks require when you purchase a home with less than 20 percent down. It protects the bank–not you–if your home is foreclosed on.
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On the other hand, mortgage protection insurance protects you and is not required. Many people do choose to purchase it, however, so their family will not ever have the burden of worrying about how they will pay the mortgage in the event of a death, disability or job loss. Mortgage protection insurance offers families peace of mind and financial security.
If you are wondering if mortgage protection insurance is right for your family, consider these five benefits.
1. Mortgage Protection Insurance Helps Your Family Cover Your Largest Expense
Coming in at anywhere from a few hundred to a couple thousand dollars, your mortgage is probably your biggest monthly expense. If someone in your family were to fall victim to death, disability or job loss, your family would probably have a very difficult time scraping up the money to pay the mortgage every month. With mortgage protection insurance, you never have to worry whether or not your family will be able to keep up with monthly mortgage payments.
2. Mortgage Protection Insurance Ensures that Your Family Will Not Lose Their Home
The recent economic crisis has made one thing very clear: personal financial crisis can hit at any time. Many families that were doing fine financially suddenly found themselves without jobs and without homes. Even if your family is comfortable now, there are no guarantees for what will happen in the future. Mortgage protection insurance is a way to protect your family against whatever the future holds by ensuring that they will at least always have a roof over their heads.
3. Almost Anyone Qualifies for Mortgage Protection Insurance
Unlike other types of life insurance, mortgage protection insurance is practically guaranteed to most people. Even if you have been turned down for other types of life insurance, you can probably still qualify for mortgage protection insurance. This fact is especially important if you have certain health conditions or if you work in a high-risk occupation, two factors that may disqualify you from being able to get affordable insurance elsewhere.
4. Mortgage Protection Insurance is Affordable
While your individual rate will vary due to factors such as your location, your home’s value and your health, mortgage protection insurance is generally quite affordable. If you are a 40 year old non-smoking male living in California, for example, the monthly cost of mortgage protection insurance on your $500,000 house over twenty years would only be around $65 a month. If you are a 30 year old non-smoking man living in Tampa, Florida, the monthly cost of mortgage protection insurance on your $200,000 house over thirty years could be as low as $25 a month.
5. Obtaining Mortgage Protection Insurance is Easy
Many banks and lenders are happy to offer mortgage protection insurance to their customers. You can most likely purchase it from your lender when you buy your home, or you can call around to various banks to see who can offer you the best rate. Even if you do not sign up for mortgage protection insurance when you buy your house, it is never too late. You will likely receive additional offers in the mail as well.
Read this: Who Really Owns Your Mortgage and Why Does it Matter?
Well, Should I Get Mortgage Protection Insurance?
While every person’s financial situation is different, if you want to save your family from worrying about mortgage payments and possibly losing their home, obtaining mortgage protection insurance is a great way to do so.
Sources:
http://money.cnn.com/2003/12/19/pf/expert/ask_expert/
http://www.bankrate.com/finance/insurance/do-you-need-mortgage-protection-insurance-1.aspx
http://www.profam.com/mortgage-life-insurance.asp
I’m not familiar with this type of insurance but it sounds interesting, especially the part of qualifying if you have been turned down for life insurance. I wonder if there are limits on how much of this insurance you could get – as in could you get a $2 million policy that would act as both – pay off your mortgage and provide income for your family if you die?