EBONY HAZELEGER: Is mortgage protection insurance worth the expense?

When you take out a mortgage on your home, you can expect to be hit by many solicitors offering mortgage protection insurance. The idea of mortgage protection is pretty simple: You pay the premium throughout the duration of the policy. And if you, the mortgage payer, were to pass away, the insurance pays out your death benefit.

There are different types of mortgage protection insurance offered to homeowners guaranteeing to pay off your loan if you were to pass away. So is mortgage insurance the best solution in protecting your home or loved ones?

Many say that it’s another way for insurance companies to siphon more money from your pocket, which can turn out to be a worthless investment. But if you take a moment to think about your health, your finances, your age, the amount of your mortgage and your budget, mortgage protection insurance may be the best solution in protecting your loved ones. Or maybe you do not need it if you are financially capable of paying off your home or if you own your home outright.

However, if something were to happen to your income, if you were to pass away, or if you were not be able to work for some reason, it will put your family in a financially difficult place.

Reasons To Obtain Mortgage Insurance Protection

If you have health problems, work a high-risk job, are self-employed, need additional insurance, or you carry your own insurance that is not covered by your employer, then mortgage protection may be the best option for you. Once you start shopping around, ask about the features of the insurance.

For example, there are some insurance carriers that carry living benefits within the policy that will allow you draw from the death benefit up to a certain percent if you were to be diagnosed with a chronic or critical illness. You might also be able to convert the policy into a whole-life policy, or even, at an additional price, get a waiver of premium with the policy.

Finally, the best option is a mortgage protection policy that pays your loved ones directly. Many policies do it this way, so be sure that that’s the kind you get if you choose this coverage.

How Mortgage Insurance Is Priced

Many insurance companies consider things like your age, your health, types of medications you’re using, your weight, your height, and your mortgage balance. And depending upon your risk assessment, many insurance companies may allow a simplified process or may need you to undergo a fully underwritten process. This means that blood and urine work will need to be provided for the carrier to complete the underwriting process.

Mortgage Protection As An Additional Alternative Along With An Emergency Fund

Many people use mortgage protection insurance along with their traditional life insurance or disability insurance as a hybrid to their policies. However, if you maintain an emergency fund of three to six months, this will assist you in maintaining your mortgage payments along with your monthly insurance premiums in the event you were to face a serious health concern or lose your job.

Final Word

Overall, mortgage protection insurance offers a wonderful peace of mind. Perhaps you go to work every day wondering what will happen to your home if you were to lose your job or to pass away. With the right mortgage protection insurance, you will never have to worry about your loved ones being a foreclosure statistic or facing a financial burden. If you do not carry mortgage protection insurance, then what’s your backup plan?

If you’re concerned about your spouse or children inheriting a mortgage they may not be able to pay and need help with your mortgage insurance options and building an emergency fund, then give my office a call today.

Ebony Hazeleger is the owner and creator of Home Plan Advisors, which specializes in helping families become debt-free, maximize savings for college expenses and retirement, and establish emergency funds while minimizing risk and income taxes based on her smart money management system. For more information, call (866) 248-1871 or visit www.homeplanadvisors.com.