Save A House
Mortgage Protection Insurance can Save a House — and more
Buying a house and getting a mortgage is a huge commitment — with all kinds of uncertainties. One of the unknowns is losing a job and even the possibility of the breadwinner’s death. Under either one of the aforementioned circumstances, how can one ensure mortgage payments will still be made? So, Mortgage Protection Insurance is one solution to avoid foreclosure.
Mortgage Protection Insurance is usually purchased when a person purchases a residence; however, these policies can be purchased within two years of the purchase and some companies offer this insurance up to five years after the residence is purchased.
The idea behind Mortgage Protection Insurance is straightforward: You pay a monthly premium, which remains the same for the policy’s duration. If you die during that time, the insurance pays the remaining mortgage.
The type of payment received from the death of a policyholder depends on the type of policy purchased. Mortgage Protection Insurance continues to change and change for the better. Years ago, MPI would pay the outstanding balance on the mortgage. Today, there are policies that will pay the original amount of the mortgage without regard to the remaining balance. The beneficiary can then use the remaining funds for the funeral or anything else.
Mortgage Protection Insurance also provides coverage if the insured becomes disabled or loses his or her job. This benefit will ensure mortgage payments continue to be paid until the insured is working again. This option can be included in the policy or left out. Applicants should look for this valuable option.
How Mortgage Protection Insurance is Priced
When computing pricing, insurance companies consider things like age, health, if you smoke, how much you drink, and the principal amount of the mortgage. For most insurance companies, a physical exam is not necessary to purchase Mortgage Protection Insurance.
Based on the national average, a mortgage averages approximately $120,000. For this mortgage amount, one would pay about $50 a month for a bare minimum policy. Riders providing additional benefits could increase the policy to about $150 a month.
Homeowners may also purchase MPI coverage for both husband and wife. This type of policy provides joint coverage for both and will pay the death benefit when either dies. What is interesting with this coverage is that it could be lower than what it would cost for two individual term life insurance policies.