No matter how you look at it, a home loan is a serious and scary investment. It involves a lot of thought, time and, above all, money. That said, it would make sense for anyone to go to great lengths to make sure they don’t blow their chance at finding the best mortgage products on the market. Still, there are some unavoidable circumstances that could hamper our efforts to secure our mortgage, as well as our financial situation. A sudden illness or an accident can cause problems when it comes to making ends meet. So how can we protect ourselves from potential financial disasters that could result from such instances?
The answer is mortgage protection insurance. Because our investment loans and other financial assets require security, it is advisable to purchase coverage. Typically, mortgage protection insurance is offered to homeowners once the mortgage loan application is secured. The purpose of mortgage protection insurance is to protect the homeowner from financial loss. There are lenders who actually make this a requirement
The process is simple. You will be required to pay a monthly premium for the coverage. Let’s say, for example, that you succumb to an illness and die, the insurance company will pay your death benefits. If you notice, mortgage protection insurance is a bit more like life insurance. However, you should be aware of the different policies implemented by your insurance provider.
Over time, mortgage protection insurance has undergone some changes. Mortgage insurance providers in the past simply had to pay off the remaining mortgage balance. But today, there are some mortgage insurance companies that provide coverage for the full amount of the loan. What this means for the family is that they will be paid the full amount of the mortgage, regardless of how much has already been paid to the lender. If your mortgage amount is $500,000 and you have managed to pay off up to 60% of the loan, you could still receive $500,000 of your insurance coverage. The insurer will deliver the money to the family of the deceased without imposing any conditions.
Death benefits will be very helpful to the surviving family, who would have been severely affected financially. Not only can they pay off the remaining balance on their mortgage and insure their home, but they also get extra money that can be used for other purposes, like sending the kids to school, starting a business, or renovating the house.
Mortgage protection insurance is one of the best ways to ensure your investment loans don’t go to waste. Not only does it protect your property from possible foreclosure, but it also safeguards your family’s financial future.