Many people have mortgages on their homes, and they are a budgetary obligation most homeowners don’t take lightly. Mortgage lenders are typically not forgiving if homeowners miss their mortgage payments. But unforeseen events can happen, such as your untimely death. If this were to occur, your family might be unable to keep up with paying the mortgage—and depending on the mortgage lender, several missed payments could be enough reason for them to begin foreclosure proceedings. Missing payments can put your family and your lender in a difficult situation. Fortunately, there is a way to protect your family and safeguard your home.
What Is Mortgage Protection Insurance?
Mortgage protection insurance (MPI) is an affordable way to cover your family financially if you should die with a remaining mortgage balance on your home. Like other insurance policies, an MPI policy is an insurance policy purchased through your insurance agent. But unlike other insurance policies, such as a term life insurance, where your named beneficiaries would receive the death benefit after the policy ends or you die, the beneficiary of your MPI policy would be your mortgage company. They would use the death benefit defined in your MPI policy to continue to pay your mortgage, ensuring your family can remain in the home.
Many insurers offer MPI policies, and much like other life insurance policies, you want to choose the MPI policy that best covers your family’s needs. It’s vital for you to talk with your insurance agent about your eligibility for coverage as soon as you know you’re buying a home.
What Is Unique About MPI Coverage?
Mortgage protection insurance is unique. Its differences from other insurance coverage are worth exploring before you decide to buy a policy. A few differences from other types of insurance include the following:
· Underwriting. An MPI policy, although a form of life insurance, has no underwriting process—you automatically qualify for a policy. If you have health issues or have a risky profession, you don’t have to go through the medical exams required with other forms of life insurance. No underwriting is beneficial, especially if you hope to acquire a policy quickly.
· Policy value. With an MPI policy, your death benefit is typically tied to your mortgage balance. If you continue to make loan payments, your remaining loan balance decreases, and your policy becomes less valuable—unlike a life insurance policy that usually keeps its balance for its duration.
These are just a couple of the differences that MPI coverage has versus other insurance. We can explore other differences—and similarities—with you to ensure this is the insurance protection you’d like to consider.
Protect Your Family Home
The Brent Lucas Agency in Leesburg, Virginia, can help you decide if MPI makes sense for your family. Call us at 703-779-0111 to talk with one of our agents.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.