If you have recently purchased a home, it is likely that you have received calls or information regarding mortgage protection insurance. This is a type of insurance policy that can help you to ensure that your family can remain in your home, even in the event of the unthinkable. So what do you need to know about this type of plan?
What is mortgage protection life insurance?Mortgage protection insurance is term life insurance that can help your loved ones to pay off your mortgage balance in the event of your death. With this type of coverage, you can choose your spouse or another beneficiary to receive the policy’s benefit, which will, leave your loved ones without the need to continue making payments on the loan.For many people, this can relieve a tremendous financial obligation if a primary income earner passes away and it can allow survivors to go on without having to drastically uproot their lives at an already difficult time for them.For many people, the death of a primary income earner means having to move away from a home they love because they can no longer afford the payments – but not if you have a mortgage life insurance policy.
age gender death benefit your health history smoking status the length of coverage Because most mortgage insurance policies are term life insurance , the longer your policy’s length (i.e., 30 years versus 20 years), the higher the premium is likely to be. The cost will certainly vary from individual to individual based on the criteria’s listed above. Disability Income Rider – This rider will allow for payments to be made if you should become disabled and unable to earn an income for a certain period Return of Premium (ROP) Rider – This rider will provide a refund of the premiums that were paid into the life insurance policy, should you survive the entire “term,” or duration of the policy.Another key factor in the price of your mortgage protection insurance will be the insurance company that you purchase it from. There are a lot of mortgage life insurance companies out there in the marketplace – and similar to purchasing most any other product or service, these insurance carriers all price their offerings in a slightly different manner.Related: What Happens When You Cash-Out Your Life Insurance PolicyRelated: Riding the Ups and Downs of a Volatile Market with Index ProductsBut a quote is just one small factor and is really just a starting point when seeking this type of coverage. You also want to be sure that you have the very best protection for your specific needs. That is why working with an independent agent who can help you in determining which carrier you will qualify for – as well as the best price – is what is key. An independent agent can also help you in comparing several different policies side-by-side and determining from there which plan will be the best one for you.This is because the cost can differ – sometimes by quite a bit – even for the very same type and the amount of coverage. And, considering that you could be paying the premium for this coverage for 30 (or more) years, paying even just $10 or $20 per month more than you need to can really add up. Check out this chapter in our buyer’s guide to help you learn how to determine the cost of life insurance.
What Mortgage Protection Is NotWhen obtaining a mortgage, it’s important to understand what mortgage protection is – and what it is not. This is because many people often confuse this type of coverage with another common coverage that is required by mortgage companies if you have less than 20% down on your home. PMI, or private mortgage insurance, is a type of insurance protection that will protect your lender in the case of default by a borrower.Lenders will require borrowers who have low down payments to purchase PMI in order to protect their financial interests – and it will cost you more each month for the PMI premium. If, however, you have put a down payment of 20% or more on your home, you won’t have to worry about this coverage.