do i need mortgage protection insurance

When you buy a home, one of the last things on your mind may be…what will happen to this house if my spouse or I pass away? Owning a home is exciting and rewarding but it is a large debt until it’s paid off. What actually happens if you pass away, and your family can no longer afford to make the loan payments without your income?  Unfortunately, after only a few months of missed payments, the bank will foreclose on your home and your family will lose both your home and any equity that has built up. That is devastating to think about! But it happens, often!

When you first move into your new home (or refinance your mortgage loan) you will likely get postcards and letters in the mail regarding mortgage protection plans. This mail is sent out by companies who help families find plans to protect the mortgage from bank foreclosure in the event of death. The question you will be asking yourself is, “Do I need mortgage protection Insurance?” The answer to that depends on your family situation.

What determines the need for mortgage life insurance?

As your agents, we can help you determine if you NEED the coverage that is being offered because not everyone does. You should consider mortgage insurance if there is a gap in your financial plan as it stands versus what you are wanting for financial protection for your family. To help us to determine if there is a gap, we consider the following:

  • Current income as a household
  • Monthly household expenses, which includes the mortgage payments
  • Types of life insurance policies your family has in place currently
  • Other types of accounts in which you are saving money, and how much of that is to be used for simple living expenses.

When making recommendations for plans, we consider the number of years the mortgage loan will take to pay off, your current age, and your health. This helps us determine what plan options you may be eligible for.

What plan options are available?

Taking all things into consideration we can show you options to cover your mortgage with a full pay off, partial payoff or plan to make mortgage payments for a specified amount of time. What usually drives the type of plan is the family budget. First and foremost, this coverage MUST fit comfortably into your budget. You want to be able to keep this in place so that it is there when you need it 5, 10, or 20 years down the road. 

So, to answer the question, do I need mortgage protection insurance…you may or may not. It is not required like homeowner’s insurance is. But if the death of a breadwinner would significantly financially impact your family and their ability to keep your home, then you definitely need mortgage protection insurance. Even a small amount of coverage is better than nothing at all. It may save your family from losing your home to the bank and losing any equity you’ve built up over time.