What Is Mortgage Protection?

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What Is Mortgage Protection Insurance? 

There are 2 terms that need to be distinguished from each other. They are very similar, but very different in what they do. The first is MIP, which stands for Mortgage Insurance Premium. This is purchased by the lender, for the lender, and tacked on to your payment. In this article, we will be talking about Mortgage Protection Insurance (MPI), which is purchased by the homeowner, for the homeowner. Since Mortgage Protection is a Term Life product, it is very affordable and brings a lot of value. It is also tied to the length of the mortgage, so a 30-year loan, will have a 30-year term.  

Mortgage Protection Life Insurance is a form of Term Life, designed to pay off a mortgage for a surviving spouse due to the death of the other spouse, allowing the spouse left behind a chance to stay in the home. This is particularly valuable when there are school aged children involved. The surviving spouse can keep the children in their schools, and not have to move, which is a valuable thing during the coping process of a death of a parent. 

A Mortgage Protection Term policy can be a level policy, or a decreasing term policy. A level policy means that throughout the term, the premiums and payout remain the same. With a decreasing term policy, the premiums remain level, but the payout decreases over time keeping pace with your mortgage balance, making this type less expensive. 

What Happens If I Leave No Coverage? 

No matter if you have school aged children, or grown children, your spouse will be left behind to pick up the pieces after your death. That means continuing to pay any mortgage payments, and any debt you leave behind, not to mention the funeral expenses. If your spouse can’t handle the house payments, they will be forced to sell, and move to a more affordable location. This could be devastating, especially if there are school aged kids still at home. No one wants to think about their family in a situation like that. 

We have all seen the GoFundMe campaigns on social media. Someone passes away, and there’s no more money (or not as much) coming in to the spouse or family, so a friend launches one of these GFMs, and some of them do ok, but most do not. It’s all depending on the charitable contributions of friends and acquaintances and even strangers, and we all know that people have been struggling financially the last couple of years. 

Is It Worth It? 

As stated earlier, Term Insurance is very affordable, due to the fact that it is temporary Insurance, and a few major carriers offer a simple issue policy. What this means for you, is a streamlined underwriting process, all done over the phone with an Agent. It is very quick and easy. If you have a Mortgage, there could not be a better gift to your family, than to purchase this type of Life Insurance for each spouse, to give you peace of mind. Peace of mind is worth everything.