As a homeowner, being able to pay your mortgage on time every month is important. What would happen to your loved ones if you were to die prematurely, become disabled or critically ill, and your income suddenly disappeared? Would they be able to pay off the mortgage without difficulty and stay in their home? If your answer to that question is “No” or “I’m not sure”, you owe it to yourself and to your family to consider purchasing mortgage protection insurance.
While there are many different types of insurance policies and it can sometimes be difficult to understand what they are and what they do, mortgage protection insurance is just what it sounds like: life insurance designed to pay off your mortgage in the event of your death. Mortgage protection plans also offer coverage to pay off your mortgage in the event you were to become critically ill or disabled.
Why Do I Need Mortgage Protection Insurance?
For most of us, our homes are our biggest investment as well as our largest expense every month.
If your loved ones depend on your income to make your monthly mortgage payment, a sudden loss of that income could have catastrophic results. Dealing with the death or disability of a loved one is already emotionally challenging; adding financial stress can create an unbearable situation. If your family couldn’t continue making payments or pay off the mortgage from other sources after your death, they may not be able to stay in your home.
Mortgage protection provides peace of mind, knowing that your family wouldn’t lose their home even if the unthinkable was to occur.
How Does Mortgage Protection Insurance Work?
While the specific benefits and features of mortgage protection will depend largely on the plan and insurance company offering it, this type of insurance functions much like other life insurance policies.
You pay premiums to the insurance company to purchase a specific amount of mortgage protection coverage. Those premiums are based on your attained age and your health, as well as the value of your home and the payoff amount.
If you die while the policy is in force, the insurance company provides funds to pay off your mortgage.
Some policies also offer additional coverage designed to provide a benefit in the event you are critically ill or become disabled. Certain policies also offer a unique return-of-premium feature that provides a refund of all of the premiums you paid into the policy at the end of the policy term. So, you can have the life insurance coverage you need and get a refund if you don’t need to use it!
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