Mortgage protection insurance, or MPI, is one way you can safeguard your property when you are unable to repay your mortgage. It is similar to homeowner’s insurance.
The only difference is that homeowners insurance covers you when there is damage to your property. A mortgage is a different type of insurance that will be helpful to you. It provides extra protection if you are unable to repay your mortgage.
One of the advantages of mortgage insurance is that you will have peace of mind. At least knowing that when you are no longer alive, your mortgage will be paid off is a good reason to purchase MPI.
Mortgage insurance does not pay for childcare or future education costs. It only pays for what is left on your mortgage. Take note of this before going ahead to purchase MPI.
Another thing about mortgage protection insurance is that it offers protection for heirs if the borrower dies while he or she has not repaid mortgage payments. Either the heir or the lender will be repaid, but it depends on the terms of the policy.
What is Mortgage Protection Insurance?
Mortgage protection insurance is an insurance policy that offers protection to mortgage lenders. If they are unable to make payments or are no longer alive, mortgage insurance will cover them. Its aim is to protect policyholders who are incapable of paying their debts due to death or critical illness.
For example, if you are no longer alive to pay off our outstanding debts, it is assumed that your heir will pay the debts if they want to keep the house. If they are unable to make payments, the loan will be cancelled.
How Does Mortgage Protection Insurance Work?
Mortgage protection insurance pays off the balance of your mortgage. When you die without repaying the loan, the loan will be defaulted on. The death benefits under MPI decrease as you repay your mortgage. MPI is often sold through mortgage lenders or banks.
How Much Does Mortgage Protection Insurance Cost?
The cost of mortgage insurance depends on certain factors. The cost is given depending on your age, height, lifestyle choices, coverage amount, and health. However, the average cost of mortgage insurance is in the range of $15 to $50 per month. It is advisable to compare quotes from different insurance companies. This way, you can find the best coverage at an affordable price.
Where Can I Buy Mortgage Protection Insurance?
If you are ready to purchase MPI, these are the places you can do so.
• A Life Insurance Provider
You can purchase MPI from a life insurance provider. Many life insurance providers offer MPI to people who need it. Although they call it mortgage life insurance,.
• Mortgage Lender
Another place you can purchase MPI is from your mortgage lender. Many of them offer mortgage insurance to their borrowers. So if you want to know more about MPI, you can go to your mortgage lender. They will provide you with more information and instructions on how to get started.
• A Private Insurance Company
Make your way to the best private insurance company to purchase mortgage protection insurance. There are a lot of private companies that offer MPI, depending on your location. So before you go out to search for one, make sure you do thorough research.
FAQs
How Long Do You Need to Have Mortgage Protection Insurance?
This depends on the policyholder. You can choose how long you need MPI. But the term generally ranges from 10 to 30 years. However, you can decide to push your MPI closer. It will be closer to how long you have left to repay the mortgage.
Can I Cancel My Mortgage Protection?
Yes, it is possible to cancel your mortgage protection, and it is easy to do. To cancel your MPI, you need to contact your insurance provider. Then inform them of your intention to cancel MPI, and then follow the instructions given to you.
Note: Your MPI cancellation varies by insurer and once you have cancelled. They will not repay you for any premiums you paid.
Can I Get Mortgage Protection Insurance With My Spouse?
Yes, you can! It is possible to insure MPI with your spouse. This means you will be insuring two co-borrowers under one mortgage insurance plan. If, at any point, both spouses are not alive, the policy will pay off the mortgage. But if only one spouse dies, the other spouse will repay the mortgage.
What Happens to My Mortgage Protection Insurance if I Move?
Your mortgage protection insurance will certainly not move with you. As long as you pay off your existing mortgage, your MPI will be terminated.
However, you can decide to sell your house to repay the existing mortgage. But you cannot move out when your existing mortgage has not been paid off.
