Think Before You Leap: Mortgage Insurance

Protect Your Home with Mortgage Insurance

13:04 17 March 2013

For most people, the biggest investment that they will have in their lifetime will be their home. In the past few years we have seen hundreds of families around the globe lose that investment due to foreclosure. More people are now protecting their homes with some type of mortgage protection.

There are two main types of mortgage insurance available for homeowners.

• The first type is called mortgage protection insurance. Mortgage protection insurance pays out a monthly benefit that allows you to pay your mortgage in the event you lose your job, become ill, or are injured in an accident and are unable to work.

 

• The second type is mortgage life insurance. Mortgage life insurance pays a lump sum to the beneficiary that can be used to pay off the mortgage in the event of your death. Both have their benefits and are, in my opinion, necessary in this current economic slump.

It is important to note that these two types are not interchangeable and each has its specific purpose. However, history has proven that approximately 1 in 10 people will be unable to work for at least 6 months or more in their lifetime, and 1 in 9 people will not live to reach 65.

So statistically, it can be easily argued that having either types or having a dual policy that covers both scenarios is the best approach. In any event, one thing is quite clear. Not protecting an investment as important and as expensive as your home would be very unwise, and could easily leave your family with few options should you become ill, are out of work, or pass away unexpectedly.

The cost of mortgage protection can be an individual policy or a joint policy with your spouse or partner. And wisdom says paying the cost to add mortgage insurance to your plan is far better than to take a chance that you won’t need it.