Mortgage Protection Insurance
We often talk about homeowner's insurance because that’s the type of policy we do. That said, just because our company doesn’t do mortgage insurance, that doesn’t mean it’s not an important thing to have. This is especially true if you have any dependents. So, what exactly is mortgage protection insurance? It is a type of policy that covers your monthly payments in case you pass away. It’s important to note that these policies typically decrease over time. This means the possible payout goes down as time goes on. This makes sense if you think about it as you pay down the mortgage over time. Here are some pros and cons of MPI:
PROS
Financial and emotional relief: You won’t have to worry about your family being financially sound if something were to happen to you.
Simplicity for your heirs: The insurance company pays straight to the lender so your family won’t have to be the “middle man.”
May not require underwriting: Meaning that your physical health may not affect your ability to obtain this type of policy
CONS
Restricted payouts: The money only pays on the mortgage. It doesn’t cover other living expenses for your family.
It’s an extra monthly payment: This one speaks for itself. It is another expense every month, so if you can’t afford it, it may not be worth it.
Not the best deal: Since the payout goes down over time and the premium stays the same you may not benefit from this type of policy. You continue to pay the same amount while you’re also paying down your mortgage, so the longer you pay the less it makes sense for you to have this policy.
You can see why term life insurance can be a good policy to have when looking at the pros and cons of MPI. Life insurance can cover mortgage, and funeral costs, and leave money for living expenses. Mortgage protection is limited to mortgage payments, whereas term-life insurance covers more. We’re not saying that MPI isn’t right for some people under certain circumstances because we believe it can be. Of course, you would need to dive deeper to see what works best for you in terms of mortgage protection insurance but if you’re curious about term life you can contact us with any questions.