What Is Mortgage Protection Insurance?

Purchasing a home is one of the biggest and most exciting purchases of a lifetime. It comes with a financial commitment. Depending on the term of the mortgage loan that you elect to opt for, you could be committing to up to 30 years of direct payments towards that home – and that is not including the maintenance, repairs, and replacements that will be required during that time.

The question you have to ask yourself is, what if you become disabled and are no longer able to work or you die, suddenly? This is where mortgage protection insurance comes into play. Continue reading to learn more. 

The Basics

Mortgage protection insurance – often referred to as “MPI” – is a specialized insurance policy that aids in making your mortgage payments each month. That is, if the policyholder and the borrower on the mortgage passes away before the mortgage is paid off.

There are policies that will provide coverage for a specified amount of time if your job is lost or you become disabled. If is often referred to as “mortgage life insurance” due to the fact that most policies will pay off the mortgage immediately when the named policyholder dies. 

Is Mortgage Protection Insurance the Same as Life Insurance? 

No, mortgage protection insurance is not the same as life insurance; however, there are some similarities. First, you pay a monthly premium. If you die, both policies will pay out. The payout will be determined by the policy’s terms. In some instances, it may only cover a certain number of mortgage payments.

In other instances, it may actually pay the remaining balance of the mortgage. In the same respect, life insurance will payout the value of the policy – minus any monies owed – at the time of death. 

How Are Mortgage Protection Insurance and Life Insurance Different? 

There are many differences between mortgage protection insurance and life insurance. First, on mortgage protection insurance the beneficiary is the company that issued the mortgage, not a family member.

Life insurance usually pays out a lump sum to the beneficiary outlined in the policy. Mortgage protection insurance does not cover property taxes, funeral expenses, and similar expenses that life insurance can and usually does cover. 

Is Mortgage Protection Insurance a Requirement?

No, most lenders do not require homeowners to obtain mortgage protection insurance; however, nearly all will advise and recommend it. Not only will this ensure that your home is paid off, it will guarantee that your remaining relatives that are left after your death are able to remain in and take possession of the home – without any issues.

If you do not obtain this insurance and your remaining family members cannot pay off your mortgage after your death, the chances that your home will go directly into foreclosure are very high. 

Contact Us Today 

If you have a mortgage, it is best to get mortgage protection insurance that covers your monthly house payments in the event of disability or death. For clarification or for assistance in obtaining the right insurance for your needs, we here at Modica Associates encourage you to contact us immediately by calling the following number: 718-855-1836

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