Buying a home is a huge responsibility and one you welcome of course. Homeownership is a symbol of your success and how hard you’ve worked to reach your dream of owning a home.
But falling behind on your mortgage because of unforeseen life events like death can put enormous stress on those left behind.
That’s why having a mortgage death benefit should be something you prepare for.
What is a mortgage death benefit and how does it prevent you from losing your home? How does it prevent late payments, higher interest rates, and foreclosure?
You prepare by having mortgage protection insurance ( MPI).
In this article, you’re going to discover how MPI can offer you the peace of mind and security you need when you own a home. And how setting up a policy can make sure you keep your home and keep your family from facing foreclosure if you die prematurely.
What Is Mortgage Protection Insurance?
MPI is a type of insurance that helps protect your family from having to pay the mortgage after you die.
This type of policy protects your home from being lost for more reasons than death, But in this article, we are only focused on the mortgage death benefit.
Like a life insurance policy, you pay a premium for MPI, and that premium will be based on some variables, like age, health, and the loan amount of the home.
You can pay premiums monthly, bi-monthly, or yearly.
A mortgage death benefit will protect your family and investment in the result of a catastrophic event involving death. The insurance will offer payments to cover your mortgage or give a lump sum directly to the mortgage lender paying off the home.
Why is Mortgage Protection Insurance Important?
Death of a loved one causes an enormous amount of responsibilities for those left behind. The family must handle funeral costs, headstones, casket, medical bills, and other formalities and debts left behind by the deceased.
Having your family handle all of those things, on top of finding a place to live because they can’t afford to pay the mortgage can be too much to bear.
When you have prepared properly with mortgage protection insurance – the family left behind has one less thing to worry about. They can pay medical expenses and other bills that need immediate attention.
Having insurance for your home that covers your death shows you care, and that you have taken the responsibility to do something to help ease your family’s heavy heart in that difficult time.
It protects the assets left behind and gives your family a chance to plan things with less worry and fear of how they will pay for everything.
Specific Death Benefits
Mortgage death benefits can be handled in a few ways, there are also other MPI riders you can add to the policy that can help with other types of expenses. Let’s first discuss some important details you need to know when considering a mortgage death benefit policy.
- When you start looking for a policy you want to get a policy that pays no matter how you die. In other words, no matter if you die in an accident or because of natural causes. This is important because some insurers will only pay for accidental death.
- Get a policy that has a fixed rate. This means that your premium will not change based on your health taking a turn for the worst. If your health begins to deteriorate you won’t have to pay more in premiums.
- Mortgage protection insurance that is specific to mortgage death benefits can be inexpensive if it’s a term policy. What’s a term policy? This is a policy that is based on a certain number of years. You can attach your mortgage length to the policy (e.g 5, 10, 15 years or more based on how much time you have left on your mortgage).
- It’s recommended to select an insurer that allows you to convert your policy from a term policy to a whole/universal policy at any time. This means you can fully convert your policy to be based on if you live to be 100 years old, not just for the term of your mortgage (This should also be with a guarantee that no new medical exams are needed). You want to have that flexibility if you decide you want to make a change.
What if you get critically ill?
In the case of an unexpected illness that leads to death, you can add what’s called a critical illness rider on to your mortgage death benefit. Why is this important? This helps to make your policy more adaptable to life events other than sudden death or natural death. Every company has its own list of critical illnesses that are covered. Some include:
- Respiratory failure
- HIV infection
- Traumatic Brain injury
And many more.
The main point is when you become critically ill often times income begins to dry up or become non-existent.
The critical illness rider will pay a benefit amount based on being diagnosed with that illness. And this does not affect or deplete your base mortgage death benefit policy in any way. It’s in addition to your mortgage death benefit policy.
It’s advised you review the critical illness list from your choice of insurers to see what is covered. Home Loan Protector a leader in the mortgage protection insurance marketplace covers an extensive amount of critical illnesses for their policyholders.
Accelerated Death Benefit
This is a benefit that some policies offer at no charge. The benefit of this coverage kicks in if you receive a life-threatening illness diagnosis. A diagnosis that decreases your life-expectancy results in a lump sum will be paid to you (Check with your insurance company to find out the life-expectancy limit).
Talking about death is a hard topic to make comfortable. But it needs to be discussed and planned for. Your home is special and where you build memories. Losing it needs to be avoided at all costs.
Home Loan Protector takes protecting your home seriously and helps thousands of homeowners plan for uncertainties in life. Offering services that help repay mortgage payments, medical bills, supplemental payments for disability, and death.
Their personal and professional experience helps take the frustration out of finding a policy that fits your needs.
In this article, you learned about mortgage protection insurance.
How it can pay off your mortgage if you die, and how a mortgage death benefit will save your home from being lost. Protecting your family, investment, and your hard work to buy your home.
You know the importance of mortgage protection insurance and who you can trust to guide you in the right direction with care.