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Are You Ready To Buy Mortgage Protection Insurance?

by Rudy Silva

Having a Mortgage Protection Insurance can be an effective way to cover mortgage payments during unforeseen occurrences that can occur to all of us, such as unemployment. Mortgage protection coverage can be an alternative source of income when the time comes.

A loan protection policy is a good policy to have. It is easy to purchase since it does not require a medical examination. If it did some people with poor health conditions could not quality.

Note that Lending institutions only provide a grace period of three months before they take over your house. Three months may not be enough for you to find a reliable source of income that will cover both the mortgages and living expenses. Hence, a Mortgage Protection Insurance is a good solution.

Another situation where mortgage protection policy is good is when you get sick and cannot work. Of course, when you are not covered with sick pay, or even if your company provides it, but it is not enough to pay your home payment, then, this policy coverage can be of help.

Depending on the terms and other stipulations of the contract, such payment protection may make your loan payments until you have fully recovered. There are insurance policies that start giving out payments between 30 days and 90 days of continuous disability or illness.

Aside from these two protection coverages, there are also riders that you can add on. The common riders are Mortgage disability, Mortgage Loss of Employment and Mortgage Critical Illness.

The first rider can help you if you suffer partial disabilities. Some mortgage protection insurance companies provide a portion of your total monthly income when you cannot work due to sickness or injury. They also give payout when you incur 20% loss on your income.

If you lose your job, will you be prepared financially to cover living expenses for your family, such as children's or family's health needs? What if, on top it all, you have loans to pay? How can you manage to not to default on any of these?

Beware if your down payment is less than 20%, you are required to have private mortgage insurance, PMI, which is a bit different from Mortgage Protection Insurance. This private policy protects the lender against you defaulting on your loan payment.

Mortgage Critical illness covers your loan payment if you cannot work temporarily because of sickness or injury. If you are between 18 and 55 years, you can avail this rider and continue to enjoy its benefits until you reach the age of 70.

Some lenders will sell your property to settle their loans. But, it is not always easy to make a quick property sale. Some banks have many properties for sale and by law can only have so many on their books. So mortgage protection insurance makes sense to them.

Finally, in death, who will pay taxes and other payments? You don't get the benefits of mortgage protection insurance while alive, but when you die, your family will. So as they say, take out protection so your family will not suffer when you are gone.

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