What is Mortgage Protection Insurance?
For most working-age families, the home is their biggest asset, and its mortgage is their biggest liability.
Ask yourself these questions:
If you or your co-borrower passed away, could your loved ones stay in the home?
If you or your co-borrower were disabled, could your loved ones afford the mortgage payments?
If you or your co-borrower needed long-term skilled nursing care, could your loved ones afford the mortgage payments?
It costs so little to protect so much!
For most of us, we need to borrow money to purchase a home. We save up for a down payment and then borrow the remaining funds to pay for the home. The money we borrow is our mortgage. Each month, the payments need to be paid on that mortgage. As we make these payments, the principal will slowly go down until we finally have no more mortgage.
However, during the period that you have the loan from the bank, those payments must be paid. It is due every month. It doesn’t matter if you're sick, it doesn’t matter if you lost your job, and it doesn’t matter if you pass away. Every month, that mortgage payment is due.
Mortgage Protection is an insurance policy that protects your home in case of premature death or disability of one of the homeowners. There is a death benefit for the amount of the mortgage placed on the homeowner. Upon death, this benefit is paid. The mortgage is then paid off, and the home is left free and clear for the loved ones. If the homeowner becomes disabled or needs skilled nursing care, Mortgage Protection Insurance can provide funds to make the homeowner's monthly mortgage payments.
Please don’t confuse Mortgage Protection Insurance with Private Mortgage Insurance (PMI). Mortgage Protection Insurance protects the homeowner; PMI protects only the lender. You can read more about PMI and how it only protects the lender here. Mortgage Protection Insurance is very similar to life insurance. In today’s world, many agents use a life insurance policy to protect the mortgage. Life insurance policies are more flexible and less expensive while accomplishing the same goals.
Let us illustrate….
John and Jenny purchased a home for $500,000. When they bought the house, they put $100,000 down and took out a 30-year mortgage of $400,000. Every month, they are making payments on their mortgage, and every month, their mortgage slowly decreases. A few months after they purchased the home, they each purchased a $400,000 insurance policy to pay off their mortgage if either one of them were to pass away. Each month, they pay their mortgage, and each month they pay a small premium to protect their mortgage. Ten years later, John is diagnosed with cancer, which eventually takes his life. At this time, the insurance plan pays Jenny $400,000 to pay off the home. When she uses this death benefit to pay off the mortgage, she no longer has a mortgage payment to the lender.
Mortgage Protection is cheaper than you think…
Studies show that most people think mortgage protection insurance and life insurance are more expensive than they actually are. In fact, they estimate that the insurance is 20% - 30% more than what the insurance really costs. There are a few different variables to consider when choosing which policy is best to protect your home. This is why it is vital to have an experienced agent help you decide which plan best fits your needs. Some people ask, do I really need an agent to purchase this protection. You can read more about this here. But the short answer is yes. Only licensed agents can sell insurance. Plus, an agent can find the best price for you.
Some people think they will feel added pressure or have to listen to a sales pitch if they engage with an agent. Although we can't speak for all agents, agents with Aultium Insurance Services have been trained to ask questions, listen to how you would like to build your policy, and be a resource for you in choosing which policy you would like. If you would like to schedule a 10-minute chat with somebody and ask any questions your heart desires, click below, and you can set up a free, no obligation, no pressure consultation with one of our agents.
Still not convinced you would like an agent.
After all of this, after all of your research and after all of your studying, you still would like to bypass the agent, apply online, not take any exam, and go straight to getting a policy. No Problem!! Your wish is our command. This will link will take you directly to an online application. You might even qualify for a non-medical exam policy and you can be approved and covered in less than 24 hours. The process of filling out the application would be less than 15 minutes!! No agent, no hassle, no medical!
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