Securing Your Client’s Dream: A Closer Look At Mortgage Protection Insurance
John has a 30- year mortgage and has made 15 years’ worth of amortizations. Unfortunately, John figured in an accident and died. What will happen to his mortgage? Will he continue paying for it? If not, who is now responsible for the home loan? Is there a possibility of property foreclosure?
Life's uncertainties, like what happened to John are possible. When a borrower dies, there is a possibility of foreclosure if payments are no longer made, thus making all payments made go down the drain. Eventually, this also means saying goodbye to your dream home.
It pays to be ready for the unknown future in case of death or inability to work due to an injury or disease. How do we deal with this? The answer would be to avail a Mortgage Protection Insurance (MPI). But, before you consider getting one, here are some important things to know.
What is MPI?
MPI is similar to how life insurance policies work. One makes monthly payments or premiums on top of your mortgage. This protects the homeowners in case one is already unable to make payments due to death or sickness. The main difference though is your beneficiary. In a life insurance plan, your beneficiary is usually your family but in an MPI, it will be the mortgage company. Meaning your loved ones do not receive a dime. But this guarantees that your family will be able to keep your home and will not have to think about meeting the monthly payments.
It may be easier to acquire an MPI than a life insurance policy — getting one does not require you to undergo medical examinations. In fact, there is a guaranteed acceptance for any MPI policy applications but the premiums may be higher compared to a life insurance policy. Make sure to read the fine print. Most MPIs have policies that can change your benefits. Factors like how much it covers are dependent on how long payments have been made. Additionally, it does not provide you protection in case you have not paid your mortgage — your home may be foreclosed.
Acquiring an MPI is not a requirement in the application of mortgages, this is just a backup plan in case some things go awry. If you have decided to get one it can be purchased from your mortgage lender and your life insurance provider.
Life is filled with worries for the future, and since many things are out of our control, all we must do is be ready and prepare for it. Getting an MPI can help safeguard your family and your home against life’s uncertainties.