What is Mortgage Protection Insurance?
Mortgage protection insurance is relatively self-explanatory. When you pass away, your mortgage protection insurance is designed to pay off your mortgage, enabling your family to continue to reside in the house. However, the reality of mortgage protection insurance is a little more complicated. A professional will be able to advise you whether this variety of protection is right for your needs or if you would be better protected with an overarching term life insurance policy.
How Does Mortgage Protection Insurance Work?
With a typical life insurance policy, the “death benefit” passes to the policy holder’s beneficiary. With mortgage protection insurance, the beneficiary is the lender. This means that when you pass, the lender will be paid the remainder of your mortgage. Your family still benefits, but not as directly as term or whole life insurance.
Do I Need Mortgage Protection Insurance?
Mortgage protection insurance differs from mortgage insurance in the sense that it is never required. Many times if the buyer has little or no down payment when purchasing a home, a lender will require Private Mortgage Insurance (PMI) to protect the lender’s assets, your mortgaged property. Mortgage protection insurance is not mandatory, but it does have many benefits. Primarily, your mortgage protection insurance lines up with your mortgage balance, making it easy for your family to pay off the rest of the home’s mortgage.