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As a new homeowner, you want to protect your valuable investment against whatever life brings. Mortgage protection insurance is a term life insurance policy that can be customized to cover your mortgage payments if you pass away while the policy is in force. This means that your loved ones could stay in the family home if you were no longer around to help with the bills, and for about $20 a month, you can rest easy knowing that the people inside your home are protected.
A mortgage protection policy can protect your home by covering your mortgage payments if you were no longer able to work due to a critical illness, disability, or death. Securing this type of coverage is a smart decision for individuals who do not have robust savings accounts they could dip into in the event of financial distress.
The death benefit of a mortgage protection policy could cover any remaining mortgage payments so your loved ones would not have to worry about relocating during an already challenging time.
Mortgage protection insurance is often confused with private mortgage insurance (PMI). PMI protects the lender from monetary loss if you are unable to repay your loan, while mortgage protection protects you and your loved ones from losing your home.
PMI is required for individuals who make a down payment of 20% or less on their home, while mortgage protection is an optional life insurance policy that can cost less than $20 a month. Mortgage protection insurance is not required for a home loan approval, it is an additional cost paid monthly or annually to protect your loved ones.
Average Mortgage Protection Monthly Rates* for $250,000 in coverage and a 10-year term
Mortgage protection insurance is ideal for younger individuals, those with health conditions who may not qualify for other types of life insurance, and homeowners. Since this type of coverage usually doesn’t require a medical exam, mortgage protection is often a good fit for people who have health issues that may not be able to obtain a policy that requires a medical exam.
If you work a high-risk job, mortgage protection is an affordable way to protect your income; having this coverage would ensure that your mortgage payments and other bills would be covered if you were injured and no longer able to earn an income.
When you purchase a mortgage protection policy, you will have the option to add riders to your coverage. For new homeowners, adding riders such as the return of premium rider can be a smart way to invest in your future. The return of premium rider would provide a full refund of premiums paid into your policy if you do not use the coverage by the end of your chosen term. This means that you could be covered for the duration of your mortgage term, then when you no longer need that amount of financial protection later in life, you could receive a policy refund.
Some policies also offer riders that would offer financial protection in the event you were diagnosed with a critical illness or become disabled and could no longer earn an income.
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