If you have a mortgage, the next thing you need to do is to make sure your family can keep the home and continue making the mortgage payments, if something happens. Over 50% of bankruptcies are due to medical issues that affect the mortgage owner.
Most lenders will require you to get Private Mortgage Insurance (PMI) which covers the bank’s risk in case you file for bankruptcy, but it doesn’t protect your family to help keep the home. PMI is different from MORTGAGE PROTECTION INSURANCE (or MPI) which will actually help your family keep the home and pay the mortgage in case of illness, accident or death of the mortgage owner. Even if only one family member owns the mortgage, it is advised that both wage earners get mortgage protection in case one of their incomes stop for any medical reason, or due to death. Would your family suffer financially if you lose your job due to sickness? Add to that the stress of caring for the sick spouse, medical expenses, time off from work for the partner providing the care – you get the picture.
Mortgage protection rates are fairly cheap, and could be as low as $7/month per $100,000 on a ten-year mortgage, for a 35 year-old who is healthy. Health and age are a factor in the cost of Mortgage Insurance, because of your ability to earn income and the ability to pay your mortgage is heavily affected by your health and your age. The younger you are, the cheaper your MPI is. Discounts are also given to non-smokers and those with a healthy lifestyle!
Some mortgage insurance plans cover illness only, some cover life only, or others cover life, accidents and illnesses. Be sure to ask your agent about each risk covered by your policy. Sometimes you may need a couple of different policies that work in tandem to fully protect you against all possible risks. For example, you may find that some mortgage insurance policies only pay your mortgage for two years in case of illness, and that may not be enough. A separate policy for illness protection may be needed if you want to extend that benefit beyond two years.
You should also be careful when considering adding optional protection riders on your policy, since the cost may also be an issue. If you look for a policy that could potentially cover all possible risks, it is possible that it could become un-affordable. In any case, some protection is always better than none, so you should work with your agent to help you find the right balance between benefits/premiums, to make sure your family is protected against most common risks at least.
We (Daniel Dragan & LifeGuy.com – Financial Guards Insurance Agency) specialize in MORTGAGE PROTECTION INSURANCE! We have over 70 insurance companies to choose from, so we can make sure we will find the best plan for your budget. If you have any questions on MORTGAGE PROTECTION INSURANCE, please contact us below: