What Is Mortgage Protection Insurance?

Mortgage protection insurance is a special type of insurance that is designed to pay off the remaining mortgage balance on your home when you pass away. It is often referred to as “mortgage protection life insurance” and “mortgage life insurance”.

The premium associated with this type of insurance remains the same throughout the life of the policy, but the death benefits associated with the account decreases as you pay on your mortgage balance throughout your lifetime.

Who Sells Mortgage Protection Insurance?

While it is true that mortgage protection insurance is often referred to as “mortgage life insurance”, it is a bit different. The main difference is the beneficiary.

In standard life insurance, you may designate whoever you want to be the beneficiary. That is, the person that the funds from the policy goes to when you die. With mortgage protection insurance, the beneficiary is the lender.

The mortgage holder gets paid on your death. As a result of this, banks and mortgage lenders sell mortgage protection insurance. 

What Is the Acceptance Rate of Mortgage Protection Insurance? 

The acceptance rate is very high with mortgage protection insurance. In fact, it is considered to be a guaranteed acceptance. You will usually not have to submit to a health exam – like you do with standard life insurance.

If you obtain a mortgage on your home, you are approved. The reason being is that this insurance pays off the lender in the event of your death. 

Mortgage Protection Insurance Premiums 

Yes, you are guaranteed acceptance for mortgage protection insurance. In most instances, all that is required is that you pay a mortgage on your home. Unfortunately, the premium for this type of insurance is typically much more expensive than the premiums associated with a life insurance policy.

While it may prove to be burdensome to pay significantly more than you would pay on a standard life insurance policy, if you are ill or work in a type of high-risk job, it is highly beneficial. Additionally, you will know that your home will be paid off so that your loved ones may have your home after your passing. 

How Long Do I Have to Purchase Mortgage Protection Insurance? 

When you take out a mortgage on your home, it is advised that you obtain mortgage protection insurance immediately.

Many companies may allow you anywhere from 24 months to up to 5 years after closing to obtain the coverage. In short, the sooner, the better. It should be understood that mortgage protection insurance is typically not a requirement, but it is highly advised. 

Contact Us Today 

If you are in the market for any type of insurance, we here at Modica Associates are capable of assisting you. Even if it is not coverage that we offer, we will be able to direct you to the companies that DO offer that type of insurance. We are located in the State of New York. To learn more or to talk to one of our insurance specialists, contact us today by calling: 718-855-1836

Recent Posts