TOP 5 THINGS TO KNOW ABOUT MORTGAGE PROTECTION INSURANCE
- Mortgage protection insurance provides a death benefit to pay off your mortgage if you die prematurely
- This allows your loved ones to remain in your home after your death without having to worry about how to make remaining mortgage payments
- You get valuable peace of mind knowing your loved ones will not lose their home
- Coverage can also be designed to pay off your mortgage if you become critically ill or disabled
- Some policies may also allow you to get your money back if the policy isn’t used by the end of the policy term
Your home is likely your largest purchase you’ll make and making your mortgage payment is pretty important. What would happen to your loved ones if you were to die prematurely or become critically ill, and your income suddenly disappeared? Would they be able to pay off the mortgage without difficulty and stay in their home? If your answer to that question is “No” or “I’m not sure”, you owe it to yourself and to your family to consider purchasing mortgage protection insurance.
While there are many different types of insurance policies and it can sometimes be difficult to understand what they are and what they do, Mortgage Protection Insurance is just what it sounds like: life insurance designed to pay off your mortgage in the event of your death. Mortgage protection plans also offer coverage to pay off your mortgage in the event you were to become critically ill.
Mortgage Protection Insurance is not PMI
PMI is designed to reimburse a mortgage lender if you default on your loan and your house isn’t worth enough to entirely repay the debt through a foreclosure sale. PMI has nothing to do with job loss, disability, or death and it won’t pay your mortgage if one of these things happens to you.
When PMI is required. If your down payment on your home is less than 20%, your lender will most likely require you to get PMI.
HOW DOES MORTGAGE PROTECTION INSURANCE WORK?
While the specific benefits and features of mortgage protection will depend largely on the plan and insurance company offering it, this type of insurance functions much like other life insurance policies.
You pay premiums to the insurance company to purchase a specific amount of mortgage protection coverage. Those premiums are based on your attained age and your health, as well as the value of your home and the payoff amount.
If you die while the policy is in force, the insurance company provides funds to pay off your mortgage.
Some policies also offer additional coverage designed to provide a benefit in the event you are critically ill or become disabled. Certain policies also offer a unique return-of-premium feature that provides a refund of all of the premiums you paid into the policy at the end of the policy term. So, you can have the life insurance coverage you need and get a refund if you don’t need to use it!