By: K.H. Koehler

Your home means more to you than just a place to live and sleep. For many, it’s also their most significant investment and the heart of their family. But what do you do if something happens and you find it difficult to pay your mortgage?

Mortgage protection insurance, or MPI, can provide a potential safety net for your home loan in an unfortunate event.

So, What Is Mortgage Protection?

In its simplest terms, mortgage protection insurance can help cover your mortgage payments if you face certain difficulties. It is a layer of protection that can help you keep your home even when you face an unexpected financial situation.

It’s important to remember that this isn’t the same as private mortgage insurance (PMI), which lenders require to protect themselves if you can’t pay. Mortgage protection is typically your choice, and it’s designed to protect just you and your family, particularly if you have limited savings or dependents.

Sometimes, Life Happens

You may have heard someone somberly respond to the question of how they are doing, such as, “Life is life-ing.” In truth, life can be unpredictable, and sometimes things happen that may make you scramble to cover bills, including your mortgage. In this case, mortgage protection can offer you coverage in several everyday situations, such as:

• Loss of an Earner: If a significant earner passes away unexpectedly and leaves you struggling, the policy can help pay off or significantly reduce the remaining mortgage and possibly help keep your family from losing your home.
• Disability: Depending on your policy, if you suddenly become disabled and can’t work, the policy can cover your monthly mortgage payments and help you avoid defaulting or losing your home.
• Job Loss: Depending on your policy, if you lose your job, the benefits can assist you in covering your mortgage while you look for a new position.
• Limited Savings: For those with little or no emergency funds, the insurance can offer support and help prevent you from relying on a threadbare financial cushion.

But Is It Worth It?

With today’s always-changing economy and rising home costs, an extra layer of security can be helpful, assuming the policy works for you. As for the policy itself, the price of mortgage protection insurance depends on several factors. “Buying MPI is similar to buying a term life policy. While there might not be a full medical exam required, your rate will depend on your age, health, weight, and lifestyle…” Yahoo Finance explains. They note: “The older you are when you begin the policy, the higher your premiums will be, simply because there’s a higher chance you’ll pass during the policy’s term…”

As with committing to any new policy, it’s always best to speak to a company representative about the potential advantages and disadvantages before making any decision. And once you decide that mortgage protection is worth considering for you, there are several questions you should ask:

• What Isn’t Covered? Learn if there are any exclusions, such as pre-existing conditions or specific job loss scenarios.
• How Long Will the Policy Last? Check to see how long the policy will cover you.
• How Will You Be Paid? Will you get a lump sum or monthly payments should you need a payout?
• What Does the Insurer’s Reputation Look Like? Always research the insurer to ensure they are reliable and offer good customer service.
• Will This Policy Work Well with Any Existing Ones? Ensure this policy complements rather than duplicates or cancels out any other current insurance.

Protecting Your Home

It’s always a good idea to do your due diligence and remember that mortgage protection differs from homeowner’s insurance, which covers damage to your property. Also, be aware that some policies may have specific rules or limits that should be discussed before you proceed.

Mortgage protection can help you secure the investment that is your home, but it’s essential to be aware of every advantage and disadvantage of your policy before you commit. Homeowners can secure one of their most significant investments by understanding an MPI’s benefits, choosing the right policy, and asking the right questions.

Disclaimer: The information provided in this article is intended for general informational purposes only and should not be considered as financial, legal, or insurance advice. Mortgage protection insurance policies vary, and their benefits depend on individual circumstances. It is recommended that you consult with a licensed insurance professional or financial advisor to assess your personal needs and determine if mortgage protection is a suitable option for you. The content of this article does not constitute a guarantee of any specific outcome and should not be relied upon as such.