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3 Reasons Why Mortgage Protection is Necessary

Buying a home is probably one of the most significant financial decisions many people will make in their lives, and it pays to be protected while making such a substantial investment. There are many ways to go about this.

For example, home and contents insurance protects homeowners from the worst-case scenarios that could occur to their properties. Another type of insurance, known as mortgage protection insurance, assists homeowners in paying out the remainder of their home loans if they’re unable to make monthly repayments due to unforeseen circumstances.

This blog post by Family First Life – Strong Tower & Hammer Lane Consultants highlights some reasons why getting mortgage protection is a good idea for homeowners.

How Does Mortgage Protection Work?

Mortgage protection is a type of disability or life insurance that pays off a home loan’s outstanding balance if the mortgage holder dies or has a significant disability that prohibits them from working.

Mortgage protection insurance (MPI) policies typically cover the interest and principal portion. Different fees incurred by homeowners like home and contents insurance, property taxes, and HOA dues are usually excluded. Still, policyholders might be able to cover these expenses by purchasing a rider.

MPI is sold by independent insurance companies and insurance agencies affiliated with mortgage lenders. It can usually be purchased within 24 months of a loan’s closing, but some providers allow up to five years.

The policy duration is the same as the length of the mortgage. The terms and conditions vary, but in general, if the policyholder dies or becomes incapacitated during the policy term, lenders will get a payout equal to the amount owed.

Benefits of Mortgage Protection

Here are some advantages of taking out this kind of coverage:

High Acceptance Rate

Convenience is one of the benefits of purchasing MPI. Anyone can buy a policy, and often no medical exam is needed in the underwriting process. This is useful for those who have a pre-existing illness or condition that disqualifies them from other forms of life insurance or raises their life insurance rates to alarming levels.

Gives You Certainty

Another advantage of MPI is that it eliminates the guesswork of repaying a mortgage. Getting a lump sum payment from a standard term policy can be intimidating. The mortgage protection insurance coverage is equivalent to the mortgage balance, and the money will only be used for that purpose. Your family will never have to be concerned about having a roof over their heads.

Supplements Life Insurance

MPI is an excellent way to supplement life insurance coverage. Suppose your mortgage is paid off using the money of a mortgage life policy. In that case, your family may be able to use all your term’s benefits or whole life insurance policy to cover bills and other expenditures.

Are you considering mortgage protection insurance? At Family First Life – Strong Tower & Hammer Lane Consultants, serving Viroqua, WI, you can get mortgage protection coverage that suits your needs and budget.

Contact us for a free estimate today!