Mortgage Protection
Mortgage Protection - 5 Things You Need to Learn About Mortgage Protection Insurance
By Robert McKnight
Mortgage protection insurance is a relatively new type of insurance that you may not know a lot about. This article will give you a quick overview of some of the most important aspects of this type of coverage.
Mortgage Protection Insurance is Not PMI Insurance
Do not confuse mortgage protection insurance with private mortgage insurance or PMI. PMI is a type of insurance that mortgage lenders require you to obtain if you do not put a down payment of at least 20 percent on your home. PMI protects the lender, not you. Once your principle balance on your home mortgage dips below 80 percent of the appraised value of your home, you can have it removed.
Mortgage Insurance Policies Differ
It depends upon the policy as to what a mortgage protection policy will actually pay. If you get mortgage life insurance, most policies pay off the entire balance of your mortgage in the case of your death. If you have mortgage unemployment insurance, then policies will pay your monthly mortgage payment while you look for another job.
Mortgage disability insurance will pay your monthly mortgage if you become disabled temporarily or permanently. If it is a permanent disability, there will generally be a time limit as to how long you can collect the benefits of the mortgage protection insurance.
These policies will pay an agreed upon amount that correlates to your mortgage payment. It may pay only the principle and interest, or it may pay principle, interest, taxes, and insurance. It depends upon the policy you choose.
MPI Pays a Cash Benefit for a Specified Time Period
Unless you get mortgage life insurance, which pays off the mortgage completely if you die, there will be a limit on the period of time for which you can collect cash benefits. These limits can be anywhere from three months to three years.
Those policies with the longer period of payment will carry with them a higher premium. When choosing the right mortgage protection insurance for you, you should consider what is more important. You may only need help with your mortgage payments for a few months while you hunt for another job. If you become disabled, you may need to have a longer payment period during your recovery.
There is a Waiting Period Before Collecting MPI Benefits
Virtually all mortgage protection insurance policies will require a waiting period before you are able to collect on a claim. Most will not honor a claim against the insurance policy if it is made within the first six months of your policy.
Also, most policies will require that you be unemployed for a certain amount of time before the cash benefit will be paid if you have mortgage unemployment insurance or mortgage disability insurance. This time period is generally anywhere from 30 to 60 days.
Mortgage Protection Insurance May Pay if You Go On Strike
If you are a union worker and your union goes on strike, you may be eligible to collect the benefits of mortgage unemployment insurance. Many policies have this as an option, though not all. If you are a union employee, you should make sure your mortgage protection policy has this as an additional protection against unemployment.
Mortgage protection insurance should not be lightly disregarded in the current economic climate, nor should it be purchased haphazardly. Take the time to learn about this new and possibly helpful type of insurance and get quotes from mortgage protection insurance providers.
Article Source: http://EzineArticles.com/?expert=Robert_McKnight
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