No matter how you look at it, a home loan is a serious and scary investment. It involves a lot of thinking, time and most especially money. Having said that, it would be logical for anyone to do everything in their power to make sure that they don’t screw their opportunity to find the best mortgage products in the market. Still, there are some unavoidable circumstances that could hamper our efforts to secure our mortgage as well as our financial circumstance. A sudden illness or accident can lead to problems when it comes to making ends meet. So how can we protect ourselves from the possible financial disasters that could stem from such instances?
The answer is mortgage protection insurance. Because our investment loans and other financial assets require security, it is advisable to purchase coverage. Typically, mortgage protection insurance is offered to home owners once the home loan application is secured. The purpose of mortgage protection insurance is to protect the home owner from financial loss. There are lenders who actually make this a requirement
The process is simple. You will be asked to pay a monthly premium for the coverage. Let’s say for example that you succumb to an illness and die, the insurance company will pay your death benefits. So if you notice, mortgage protection insurance is a little more like a life insurance. However, you must be aware of the different policies implemented by your insurance provider.
As time passed, mortgage protection insurance saw some changes to it. Mortgage insurance providers in the past simply had to pay the remaining balance of the mortgage. But today, there are some mortgage insurance companies that provide coverage for the full amount of the loan. What this means for the family is that they will be paid the full amount of the mortgage regardless of how much have already been paid to the lender. If your mortgage amount is $500,000 and you’ve managed to pay up to 60% of the loan, you’d still be able to receive $500,000 from your insurance coverage. The insurance provider will give the money to the deceased’s family without imposing any condition.
The death benefits will be very useful to surviving family, which would have been seriously hit financially. Not only do they get to pay the remaining balance of their mortgage and secure their home, they also get additional money which can be used for other purposes like sending children to school, starting a business, or renovating the house.
Mortgage protection insurance is one of the best ways to ensure that your investment loans will not be put to waste. Not only does it protect your property against possible foreclosure, it will also safeguard the financial future of your family.