Mortgage Protection Insurance- Who Should It Really Protect?

Mortgage Protection Insurance is a candy wrapper for term life insurance. Whether you are a first time homeowner or have owned many homes, the questions remains what happens to the home if the breadwinner or mortgage holder dies premature? No one likes to think about death, but it is prudent to think about contingencies and the future. The mortgage does not disappear because the breadwinner does. Soon after signing for a mortgage most consumers receive marketing like a  a mailer that screams out at you- BUY NOW, MORTGAGE PROTECTION, and NO MEDICAL EXAM NEEDED.  Aha, you say, here is my answer. Well, yes and no.

What Is Mortgage Protection Insurance?

Mortgage protection insurance or MPI, is a term life insurance policy used for the purpose of paying off the debt of a mortgage at the untimely death of the mortgage holder. There are many marketing companies and insurance companies like Foresters who sell overpriced no exam MPI.  The do not use the term” life insurance” in their marketing efforts instead preferring to trick the consumer into buying a product with overpriced options to mislead the consumer.  They advertise that they will pay your mortgage if you lose your job which is not true, they advertise that they will pay your mortgage if you become disabled which is sort of true. For an extra fee they will sell the consumer an overpriced no exam short term disability policy that is substandard to standalone disability policies available on the open market. These MPI policies do vary considerably from one insurance carrier to another so that the “devil is in the details.”

Buy Mortgage Protection Insurance separate from lender:

Sometimes, you may have the opportunity to buy MPI from your savings and loan lender, but since most the mortgages these days are sold onto secondary markets, usually the MPI offer will come from an insurance company just specializing in this product. This being so, you, as the consumer, can shop for really what is the best option for you and not for the lender or the insurance company. If you want the insurance coverage why not really get ultimately the best product for you and your finances by shopping with an independent life insurance broker.

Other Alternatives

Since Mortgage Protection Insurance is a life insurance policy then look for a plan with real solutions and alternatives. The dollars invested will really bring you more benefit per dollar spent. Consider term life as a real problem solver. If you intend on having your estate be more encompassing for your family so that it not only pays off the mortgage but provides a financial cushion to cover debt settlement and living expenses then only term insurance really addresses the issue. In today’s tricky real estate market, a financial solution for your family is not just to have a paid off house. This locks up equity without really providing for living expenses. Shop for term coverage and the rates you are quoted should be better than Mortgage Protection Insurance. Shop with an independent broker  by filling out a request here.