Should You Be Purchasing Mortgage Protection Insurance?
If you have decided to invest in a property and obtained a mortgage you can rest assured you will also be asked to purchase mortgage protection insurance. Mortgage protection insurance is available in different forms and it is designed to cover your loan payments in the event of job loss, disability or death.
Should you be purchasing mortgage protection insurance or is it just another method for the mortgage providers to take some extra money for your wallet every month to protect itself if you meet an untimely demise?
Your health and financial situation will determine what you want to happen to the property when you are no longer around. We are providing some of the pros and cons of mortgage protection insurance along with the tips for purchasing the best policy for a price that will be suitable for you.
[su_quote]However my parents – both of whom came from impoverished backgrounds and neither of whom had been to college, took the view that my overactive imagination was an amusing quirk that would never pay a mortgage or secure a pension.
~J. K. Rowling [/su_quote]
What Precisely Is Mortgage Protection Insurance
Mortgage protection insurance does not differ greatly from life insurance. The cost of the policy will depend on the value of your mortgage, your age, health, and the costs can also differ according to your occupation. When you purchase mortgage protection insurance to pay off your mortgage in the event of untimely death the insurance company will issue a check to the mortgage company leaving members of your family without concerns about paying for the property.
The insurance company will also make payments directly to the mortgage company if you suffer from problems such as unemployment or disability. However, this facility is generally available only for a year or two and insurance companies may also have a waiting period before they begin making the payments. You must understand that disability or unemployment policies only pay the principal and the interest on your mortgage.
The law stipulates that you must get private mortgage insurance if you have made a down payment of less than 20% for the purchase of your property. Private mortgage insurance does not consider disability, unemployment or death but makes payments to the bank if you face a foreclosure.
The Pros Of Mortgage Protection Insurance
Mortgage protection insurance policies are generally issued on a basis of guaranteed acceptance. People will be required to answer a few questions when filling out the application for the policy and the questions are primarily designed to prevent people from getting the coverage in cases where they are not insurable or only insurable and high premiums because of health-related issues. It can also be valuable for people who are working in high-risk occupations because these are the people who are unable to get disability insurance. People are advised to factor in all the other big costs of owning a home before considering whether or not they want to spend money on mortgage protection insurance.
The Cons of Mortgage Protection Insurance
Mortgage protection insurance is basically a waste of money when people own their home outright. Moreover, mortgage protection insurance is a policy which offers declining benefits whereby the payoff amount decreases as you continue paying your mortgage amount. A number of financial planners have spoken negatively about mortgage protection insurance and have advised it would be better to take a comprehensive look at the finances of the family then purchasing mortgage protection insurance.
[su_quote]What the mortgage bubble was all about was big banks like Goldman Sachs taking big bundles of subprime mortgages that were lent out largely to low-income, highly risky borrowers, and applying this kind of magic-pixie-dust math to these bundles of securities and slapping AAA ratings on them.
~Matt Taibbi [/su_quote]
Choosing Mortgage Protection Insurance At Affordable Prices
Purchasing mortgage protection insurance can be considered as a smart option for people who are dealing with health issues are facing job risks that are making it difficult for them to purchase disability insurance because of high premiums. People are advised not to purchase mortgage protection insurance through the mortgage company without conducting plenty of research and trying to understand whether they can really benefit from the purchase of mortgage protection insurance.
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