Mortgage Protection Life Insurance

As an adult, your home is often one of your largest and most important investments. With foreclosures up over 75% from last year, it is more important now than ever before to protect your home. The last thing you want is to burden your family with the complicated process of finding a new home while also dealing with the devastating loss of a loved one. While most life insurance policies have some type of mortgage plan, not everyone has an active policy in place. In fact, it is estimated that only about 52% of adults actually have an active life insurance policy. Of that 52%, more than half agree that the main reason they have to plan is to guarantee their homes would be paid off when they pass. As you age, your chances of health-related problems are likely to increase, making it even more difficult to find a policy that provides the coverage you need while staying within your budget. MPI can protect your home when other policies can’t.

Mortgage protection insurance, also known as MPI, is a type of life insurance plan that was designed to cover your mortgage costs if you pass before completely paying off your house.

Despite a few key differences, mortgage protection insurance is very similar to term life insurance in the way that it works.

1. Purchase an insurance policy
2. Pay your premium each month
3. Your coverage lasts until the end of your policy term. If you pass away during this term, your death benefit will be paid out to your beneficiary.

Unlike a typical term life insurance policy, your beneficiary is not a family member or friend. The beneficiary of an MPI policy is usually a lender or a mortgage company. This means that the payout will completely bypass your family and go straight to the financial institution responsible for your mortgage loan. While your family isn’t receiving any direct monetary payout, they will be benefiting from a lien-free asset when your home’s mortgage is paid in full.

Another key difference is that the payout decreases over time. This is because the amount of your mortgage also goes down. After 5 years, the amount of your MPI decreases to the amount remaining on your mortgage payments.

Finally, the policy duration of MPI is different from term life insurance policies. Most term life insurance lengths are fairly flexible and allow for 5-10 year intervals. Because mortgage protection insurance is directly tied to your mortgage length, your policy will last the same length as your mortgage, usually 15 to 30 years.

The cost of your premium can vary greatly depending on several factors. Some of these factors include:

• Amount left on the mortgage
• Length left on mortgage payments
• Your age
• Smoking status

Costs & Benefits of Mortgage Protection Insurance

Most MPI policies cost around $50 a month. The cost will vary greatly based on the cost of your mortgage, the length of your policy, your current health condition, and any rider options you may select. Below are some examples from the top companies of the average monthly costs for a healthy individual’s basic 15-year plan.

| Insurance Company |Cost | | Protective | $91.00 | | Nationwide | $16.00 | |Banner Life | $60.00 | |USAA |$35,00 | |Haven Life |$28.00 | |State Farm |$30.00 |

Mortgage protection is tied directly to your mortgage. This means that the payout can only go towards the remaining balance of your home loan. This can help to fulfill your financial commitment and help you to avoid foreclosure, providing both you and your family with peace of mind that your home will be safe.

Although MPI can sometimes cost slightly more than other term insurance policies, it also carries with it other benefits. 2 of the most significant benefits include guaranteed acceptance and flexible benefit payout options.

Guaranteed Acceptance

Most MPI policies have guaranteed acceptance. This benefit is particularly attractive if you are having a difficult time obtaining a traditional life insurance policy due to underlying health issues or if your policy premium is too high to comfortably afford. The vast majority of MPI policies allow you to skip the underwriting process and do not require a medical exam to provide coverage. While most MPI insurance policies honor the guaranteed acceptance policy, some could deny you due to age limits, certain medications, and permanent disabilities, though this is an unlikely occurrence.

Flexible Benefit Payout Options

Life throws many unexpected challenges our way. Many MPI policies even include temporary coverage for extenuating circumstances before the death of the policyholder. In the event that you become ill, unemployed, or disabled and are unable to make payments on your mortgage, many MPI policies can take over those payments, allowing you time to rest and recover without the added stress of foreclosure. This flexible coverage option typically has a time limit (which can sometimes be as long as 24 months!).

MPI is best for someone who does not have a traditional life insurance policy in place or for someone who can not qualify for one due to health conditions or age. Mortgage protection insurance might be a more affordable and attainable option if you are;

• You recently upgraded your lifestyle (ex. home) and want a quick, easy way to add to existing life insurance
• You’re concerned about the medical examinations associated with term life insurance
  • A smoker
  • Obese
  • Diagnosed with high blood pressure
  • Suffering from other life-threatening diseases.

If you have waited too long and are now finding it difficult to obtain a life insurance policy or you have pre-existing health conditions that disqualify you from a traditional life insurance policy, mortgage protection insurance may be a good option for you. You may also consider MPI in addition to your current life insurance policy to help supplement your coverage. This would allow your life insurance policy to cover bills and passing expenses while your mortgage is covered by this alternate policy.

A mortgage is one of your largest and most expensive investments, and having a policy in place to protect your family from a large financial burden when you pass is crucial. MPI can protect your home from foreclosure and is a simple solution to keep your home in the family when you pass. Leaving your family financially prepared to pay off your home should be a top priority.

To learn more about Mortgage Protection Insurance and all of the ways that it can benefit you and your family, please fill out this simple, online form and one of our highly trained staff here at SAO will reach out to answer all of your questions. Connecting with a professional can save you time and money, and help you to make the right decisions to plan for a financially stable and successful future.