Mortgage Protection Insurance
Many home buyers overlook a very important option when buying a home… Mortgage Protection Insurance (MPI). You may be wondering what this is and how it works. it’s fairly simple and a good thing to have for your own and your family’s future.
Mortgage Protection Insurance is a specific type of term life insurance aimed at covering the balance of your home mortgage loan in case of the untimely death of the borrower. Options are also available for critical illness or disability allowing for a safety net if the borrower is unable to work.
Here is how it works…
1. The lender is the beneficiary of the policy. This means the payment, in case of death (or critical illness or disability if elected) goes directly to the lender to pay off the debt on the existing loan.
2. Decreasing benefit. The payout decreases over time as the loan is paid off. Amortization of the loan directly correlates with the amount paid out ensuring that only the remains amount borrowed is paid to the lender.
3. Potential additional benefits. As stated earlier, some mortgage protection insurance policies allow for coverage to include not just death benefits but also disability and critical illness. Consult with your insurance agent for details and costs for the additional benefits.
4. No medical exams. Many providers of mortgage protection insurance policies do not require medical exams. This feature makes it easier for homeowners to apply and be eligible for the insurance as compared to regular life insurance policies that require medical exams.
5. Fixed premiums. Premiums can be fixed for many buyers allowing them to plan and budget accordingly. However, this may result in higher premiums, especially for healthy consumers.
You may be asking: “Does one have to have MPI?” Probably not. The question you should ask yourself is in case of your untimely death or if you are injured critically or become disabled unable to work and make payments on your loan, can your family con paying off the mortgage debt? Are you saddling your family with a debt they cannot afford to pay? Ultimately, would you rather pay off the mortgage debt allowing your family to continue living in the home you built together, or face the alternative of having to move out and relocate to a smaller house or apartment because it is all they can afford. The choice seems obvious to me but everybody has their own opinion.
If you want to know more about mortgage protection insurance, consult with your insurance broker and get all the details before making any decisions. Our office can assist you with obtaining a quote for your mortgage protection insurance policy. Call, text or email us today.
~Rafael Amador
email: Rafael@Amador.RealEstate