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If you’re a homeowner, chances are you probably have homeowner’s insurance to cover any accidents that happen on your property or damage due to water or flooding. While homeowner’s insurance is usually required when purchasing a home, this insurance plan only protects the home itself, rather than the people living there. That’s where mortgage protection insurance comes in. Mortgage protection insurance is a life insurance policy that will step in and cover your mortgage payments if you are unable to pay the bills due to a disability, critical illness diagnosis, or death.
What is mortgage protection insurance?
Mortgage protection is an affordable type of term life insurance that is designed specifically for homeowners. A mortgage protection plan typically provides coverage for the same number of years – or “term” – as your mortgage. The amount of mortgage life insurance coverage you need will depend on your income, your dependents and your spouse’s life insurance coverage (if any).
How does mortgage protection insurance work?
Mortgage protection insurance starts with an application for coverage with an insurance company. Quility offers online applications and one-on-one consultations.
Once your policy is in force with an insurance company, you make payments – also known as “premiums” – to maintain coverage. If you pass away during the term, your beneficiary will receive funds to pay off your mortgage.
It is crucial to update your insurance coverage to reflect any new mortgage value in order for your family to remain protected. If your mortgage protection term has ended, it’s time to re-visit your insurance needs.
Mortgage protection insurance is designed to cover your mortgage payments, so most people select a policy term that is close to the number of years you will have any outstanding mortgage payments. Once your application for insurance is approved by the insurance company, you will pay a monthly or annual premium. As long as your premiums are paid on time, your policy remains “in-force.” If you pass away during this time, the insurance company will cover the remainder of your mortgage payments so your loved ones can stay in the family home.
Is mortgage protection insurance affordable?
Average Mortgage Protection Monthly Rates*
$250,000 in coverage and a 10-year term
*These are average rates for female, non-smokers in excellent health and presented for example only. To get your real rate, fill out our short form.
For most people, a mortgage protection policy is one of the most affordable types of insurance on the market. Your premium is based on the amount of coverage you need (the amount of your mortgage), as well as your health, age, and tobacco use. Many insurance companies offer simplified underwriting, meaning you won’t need to visit a doctor for a medical exam in order to qualify.
If you pass away during the time your policy is “in-force,” the insurance company will cover the remainder of your mortgage payments until your home is paid off. This can provide a huge relief to your loved ones, as your family will be able to stay in their home and not have to worry about keeping up with the bills. You can also purchase riders for your policy, which would offer additional coverage in the even that you become critically ill or disabled and cannot work.
For many people, this type of insurance is a better fit than a standard term or permanent life insurance policy due to its affordability. If you are a homeowner, mortgage protection is the simple solution to ensure your loved ones can stay in the family home if something happened to you.
Even if you have life insurance coverage through work, mortgage protection insurance can supplement this coverage by supporting your family during a potential hardship, providing mortgage payments while your employer-sponsored life insurance could cover other bills or expenses related to your passing.
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