The Best Way To Find A Great Mortgage Protection Plan

Buying your dream home is an excellent investment. It’s often one that ensures a peaceful stay after retirement. While applying for a mortgage, you may be offered a mortgage protection plan from partner companies.

A mortgage protection plan is not mandatory, but it covers an array of worst-case scenarios that may negatively impact your new home. For instance, if you pass on suddenly, it protects your family against eviction.

Here we take an in-depth look into mortgage insurance and its critical riders. Plus, you’ll learn how to find the best mortgage protection plan.

WHAT IS A MORTGAGE PROTECTION PLAN?

A mortgage insurance policy protects your family. These plans protect against hefty monthly payments if you die before paying off your mortgage. Some mortgage protection plans also cover your family if you become disabled or lose your job.

But a mortgage protection plan isn’t for everyone. This article on the pros and cons of mortgage protection insurance can help you decide if this is the right insurance product for you.

Signing up for a mortgage protection plan does not exempt you from paying your monthly premiums. It only covers the interest and principal of your mortgage. Other expenses like homeowners insurance and property taxes remain your responsibility.

WHAT ARE THE KEY RIDERS OF A MORTGAGE PROTECTION PLAN?

Like traditional life insurance, a mortgage protection plan can come with a set of riders for the borrower. But, insurers have different variations for critical riders, namely;

DEATH BENEFIT

If you die during the policy’s life, your beneficiaries get death benefits. But, in mortgage protection, your family is not a death benefit beneficiary. Instead, the insurer pays out the death benefit to your mortgage financier. It’s one less thing to worry about.

TERM LENGTH

Mortgage protection insurance has a fixed term length that matches the mortgage payment period. For example, if your mortgage is for 30 years, the protection insurance follows suit. Insurers may also consider your age when setting up the term length in some cases.

RETURN OF PREMIUM

This rider guarantees a refund of your premium contribution upon the expiry of your policy term. But, the refund does not include any applicable fees.

DISABILITY WAIVER

You get a temporary waiver under a mortgage protection plan if you become disabled and can’t pay the premiums. You can forgo your premium payments through the waiver while your policy remains active. Most insurers have a 6-month waiting period for a waiver of premium rider.

BENEFITS OF MORTGAGE PROTECTION

Mortgage insurance offers many benefits, including peace of mind and guaranteed acceptance. Take a closer look at some benefits you should expect from your mortgage protection plan.

• Guaranteed Peace of Mind: In a dynamic and uncertain economy, a job loss may pop up. With protection, you stay comfortable without worrying about eviction when you are out of work. Your family is also safe when you pass on.
• Eliminates Underwriting Process: Life insurance requires formal underwriting and paperwork. This is because your health determines the terms. A mortgage protection plan eliminates underwriting and focuses only on some health questions.
• Allows Guaranteed Acceptance: Mortgage protection companies operate with guaranteed acceptance policies. People with health issues can still get protection without paying higher premiums.

HOW TO FIND THE BEST MORTGAGE INSURER

Most homeowners only consider the cost of mortgage protection before signing up. But, several factors are critical as well.

Here are three essential questions you should ask in your search for a great mortgage protection plan:

# 1: Is There a Disability Waiver?

Most companies include a disability waiver as a significant rider and part of the package. It’s still a good idea to ask about the terms. Some insurers may allow a 13-week waiting period, while some may allow 26 weeks. Others may allow up to 6 months.

#2 Does the Policy Include Guaranteed Insurability?

Mortgage insurers set stringent requirements that determine protection policies for borrowers. Top among them includes proof of sound health and age.

For example, if you have valid mortgage protection worth $500,000, you may consider topping up while moving into a bigger home. Thus, you will upgrade your insurance cover to a higher level, which requires a medical review. If you are not in sound health, you may not qualify.

Guaranteed insurability gives you extra protection without undergoing a new medical review or providing proof of sound health.

#3 What Type of Coverage Meets Your Needs?

There are different types of mortgage protection plans available. A single policy will suffice for sole ownership, while joint home ownership will have joint and dual coverage options. A joint policy will cover you and your partner while you both live. If one dies, the policy settles the remaining mortgage amount, then stops. A dual policy though, is different. It pays the remaining amount if one of the policyholders passes on and allows continuity of the policy.  If the second policyholder passes away, it settles the remaining amount before it stops. So, a dual policy is more expensive.

MORTGAGE PROTECTION PLAN: IS IT WORTH ANYTHING?

Mortgage protection guarantees peace of mind, knowing your family won’t lose the home if you pass on. Besides, a job loss or disability may come knocking when you least expect it. So, you are safer with some protection at hand.

If you have a mortgage yet are battling a severe illness or working where job security is a key concern, a mortgage protection plan is your best bet. Contact your nearest financier to check for eligibility.