3 Thoughts on What is Mortgage Protection Insurance?
  1. Reply
    Iffy
    January 31, 2014 at 9:23 pm

    That is insurance taken by the buyer to ensure the mortgage is paid in full upon their death.
    Especially important if only 1 spouse works

  2. Reply
    Margarita D
    January 31, 2014 at 10:05 pm

    Mortgage Protection Term Insurance is a form of life insurance that is intended to provide enough money to pay off the home in the event of the premature death of the insured — in essence the coverage amount follows the loan amount, i.e. as the loan balance goes down the amount of coverage goes down. This is also known as a decreasing term life insurance product. Because of how the product has been set up it ends up being one of the most expensive life insurance products on the market when comparing the rate per thousand.

    If your sole intent is to at a minimum cover the mortgage amount, you are better served purchasing a 30 year level term policy since this will end up costing you less and provide more coverage. If your mortgage is for less than 30 years, the insurance companies also have 20 or 15 year level term products.

    I hope this information helps. Good Luck

  3. Reply
    Kor
    January 31, 2014 at 10:11 pm

    Just to add on to Margarita D’s answer. It is not only important to provide mortgage protection against death, consider total permanent disability and critical illnesses as well. They should be able to be added on as riders. It will of course increase the premium so only get it when it is within your affordability.

    If I buy a house and the mortgage amount is $ 500k and the loan is for 30 years, I will protect myself against death, TPD and CI for $ 500k for 30 years. If cancer strikes, I do not need to worry as I will be ensured of a roof over my head. If I need money for medical expenses, I also have the option of selling it and get a smaller unit for better cash flow.

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