Mortgage Protection Insurance can be a valuable resource for homeowners if an unexpected event prevents them from being able to pay their mortgage. Mortgage Insurance is a financial product that is different than some other insurance products because it is frequently offered on a guaranteed acceptance basis. Other types of income protection insurance may require the applicant to pass certain tests or have health issues that would typically preclude them from receiving income protection insurance. Individuals who work in high risk fields may have difficulty acquiring insurance for income protection, but mortgage protection insurance can still apply to these individuals. Banks may not always work with homeowners who are struggling financially, so this insurance product can provide them with protection that they may not otherwise receive.
Mortgage insurance is a financial product that will allow the service provider to pay for a client’s mortgage for a specific amount of time in case he is financially unable to do this himself. This can help the client keep his home and avoid foreclosure if he runs into a financially difficult time. The insurance will not typically cover a mortgage payment for any financial difficulty; the mortgage insurance will only kick in if a client becomes disabled or if he loses his job. Some mortgage protection insurance will pay off the balance of a mortgage in case the client dies so that his surviving spouse or children will not be burdened by a large mortgage payment. The insurance company will send a direct check to the lender to pay off the mortgage balance.
Mortgage protection insurance will pay a client’s mortgage payment for a specified amount of time that is agreed upon at the time of the contract. This can typically range from six months to two years. There is often a waiting period before a client can request for payments to be made to the lender. The insurance company may also pay for fees related to the mortgage, such as homeowners’ association fees or taxes.
The cost of mortgage insurance will depend on a variety of factors. One important factor is the amount of the mortgage that is remaining on the home. A client’s age and health are other considerations. If a client works in a high risk field where unemployment rates are high, the cost of the insurance may also increase. This is based on the level of security of the job. Additionally, if there is a recession, the cost of insurance may also increase. Because there is a higher risk for job loss during a recession, insurance companies must compensate for this risk by charging a higher fee during riskier times.
Mortgage protection insurance is different than private mortgage insurance which is required for properties in which owners have less than 20 percent equity. Although clients are not legally required to maintain income protection insurance, this insurance product can come in handy. It buys homeowners a little bit of time to get back on their feet after a financial setback, such as a job loss or disability prevents them from maintaining their current level of income. Income protection insurance can also help some homeowners if their spouse suddenly dies. For a small monthly fee, homeowners can have peace of mind knowing that they will be protected in case of a sudden change in income and that they will not lose their home in a foreclosure process.
