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Ultimate Guide to Mortgage Protection Insurance

by Seth
Mortgage Protection Insurance

If you have a house of your own, it is a great blessing. But this blessing may have some risks, which may have harmful effects on you and your family. What if your house gets harmed due to disasters or your property gets stolen? Do you know? You need Mortage Protection Insurance

Mortgage protection insurance is the best way to save and protect your house and property. MPI is like an offer by an organization to protect your home and property. In case of any damage or loss, the organization will provide you the money for your lost property.

Many people question how much Mortgage protection insurance is? So the answer is that it depends on the organization from which you are buying home insurance. Different organizations have different policies regarding insurance.

What is Mortgage Protection Insurance?

As mentioned above, it is for the security and safety of your house and property. If you don’t have your own home and live somewhere on loan, then MPI helps you pay house rent. But you would be responsible for the other taxes like property taxes or homeowners insurance.

Different insurances have different policies and their way of working. Some insurances help your family members after you pass away. If you have a balance on your mortgage and you die, your insurer will help your family in this situation. Your insurer will directly approach the lender of your house and pay him the remaining dues.

Some insurances help you when you lose your job or get disable in an accident. Some policies may pay your mortgage rent up to two years after you lost your job. This type of policy gives the man great support in such a financial crisis when you don’t have a job.

Do You Need Mortgage Protection Insurance?

Some people even didn’t know if their insurance was sufficient or falling short of their needs. It is not necessary that every time you buy MPI, it would benefit you. A simple life insurance policy would be sufficient for your needs if you know your expenses ultimately.

Using the DIME method, you can know whether your current insurance policy is enough or less than your needs. DIME stands for debt, income, mortgage, and education. DIME method can be applied in just two steps:

The first is to add all your debts, mortgage balances, revenue, and educational expenses of your children. Now, if you have already bought any insurance, subtract this sum from that insurance. If you are falling short of money, it means you have to buy insurance equal to that amount.

Mortgage Protection Insurance Term Length

There are generally no restrictions on the term length of a term life insurance policy; you can usually pick a term length between five and ten years. Most insurance companies will even let you choose a duration that fits your needs. 

In general, though, a mortgage protection insurance plan is locked in for 15 years or 30 years, similar to a mortgage. Depending on your age, you may also be limited in the duration of your term.

Pros of MPI

Before buying anything, the buyer takes a look at its pros. That is how the product is going to help him. Similarly, there are some pros for MPI, and any buyer should check these as it is the matter of his house. Some pros of buying Mortgage Protection Insurance are given below:

Guaranteed Acceptance

Nowadays, a guarantee is a word most often used. MPI also provides guaranteed acceptance to its buyers. It helps people who have certain health risks.

Peace of Mind

Another thing is that buying insurance keeps your mind at peace. You don’t worry too much about your job, which you lost recently.

Cons of MPI

Besides having certain benefits, Mortgage Protection Insurance also has some disadvantages. We can consider it optional, that if you can’t buy other insurances for some reasons, this may also benefit you. We may say that MPI is better if you have no additional insurance subscribed.

The cons that we found in buying MPI are listed below:

More Cash Out of Your Pocket

Buying MPI may be costly for you if you are going for a monthly subscription. It may overburden your monthly budget, due to which it is not preferable by most people.

Limited Benefits in Some Cases

Besides being costly, MPI may also give you limited benefits in some cases. If you are paying your mortgage debts, then going for an MPI is not a good choice. The MPI will help you pay the debt initially, but MPI will give you less money as the debt gets lower.

Potentially Better Alternatives

Though, the MPI added a new policy to its rules. It is known as a level death benefit, and according to it, MPI would not decrease the money. But still, there are better alternatives to it. Other insurances give you more protection over many things that may include your health or property or anything you own.

If you have an MPI premium, it still won’t help your family members after your death. It is because MPI pays the money directly to your lender. If your beneficiaries want to utilize that money somewhere else, they can’t do it.

INCOME RESTRICTED HOUSING AND HOW BAD IS IT?

In contrast, if you have a life insurance policy, they will approach your family on your death. As your loved ones wish, where to spend the money or if they want, they can cash it out also. Moreover, for people in good health and are non-smokers, life insurance is less costly than MPI.

Where to Get Mortgage Protection Insurance?

If you are determined to buy an MPI policy after knowing all the facts, you might face some problems. Your main problem might be, what the best mortgage insurance companies are? For that, you may have to do some homework.

As MPI is less usual as compared to life insurance, you have to go for a search. Find out the companies in your area that provide MPI and compare all the companies’ rates and policies. Carefully read the guidelines, what it says and what they are offering you.

After you have selected a company from which you want to buy MPI, try to compare it with life insurance. You might see the difference between both policies, and you will find the better one.

Some of the Best MPI Companies

We thought we might help you by giving you some names of the best mortgage insurance companies of 2021. We searched for the best companies, and we’ve got the five best companies for you.

Amica

Amica is one of the top insurance companies in the US that offers various insurances. The monthly cost is 109.33 dollars, and it provides life insurance and specific other insurances also.

USAA

USAA is also among the top insurance companies. This company serves those who served the American armed forces at any time. It has about 34000 employees and some 12.8 members worldwide.

Erie Insurance

Erie Insurance also offers life insurance and auto insurance. The monthly cost for Erie insurance is 79.25 dollars. But it is not a worldwide organization. It works only in some parts of the East and Midwest.

Allstate

This is another of the top best insurance companies that offer insurance at the monthly cost of 169.00 dollars. It is one of the most widespread insurance companies in the US, with 42000 employees and 16 million customers.

State Farm

Last but not least, State Farm is also one of the best insurance companies in the US. Its monthly cost is 122.50 dollars, and it also provides online service. It has about 58000 employees and some 83 million customers.

Frequently Asked Questions (FAQs)

What is mortgage protection insurance, and do I need it?

MIP is a protection and safety guarantee for your house and property, and you should buy one. If you haven’t purchased any other insurance, try to buy it as soon as possible.

Is it worth having mortgage protection insurance?

Yes, of course. Buying Mortgage Protection Insurance will provide your house and property extra protection. For the safety and security of your property and family, you should buy an MPI.

What is the average cost of mortgage protection insurance?

It depends on the company and its policies. But if we see, the average cost is about 60 to 100 dollars monthly. If you want to buy insurance from an average company, it may cost you almost 50 dollars per month. And if you go for the best company with many security options and policies, it will cost you up to 200 dollars per month.

Final Words

The above article was all about Mortgage protection Insurance and we tried to sum up everything in this article. Still, if you are confused about any point, let us know in the comment section. We will be happy to help you.

We have also mentioned some best mortgage insurance companies for you to make your work easier. Try to get the best insurance for yourself to stay safe and enjoy your life.

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