Just like our last article stated, once you purchase a home, you will be bombarded by mailers and offers. Unlike the other article where we talked about scams that prey on unsuspecting homeowners, mortgage protection insurance is a real product. However, its uses are more niche. 

A common thing to confuse mortgage protection insurance with is Private Mortgage Insurance or PMI. Private mortgage insurance protects the lender in case you default on your mortgage. Mortgage Protection Insurance protects you and your family if anything were to happen to you. They will help you pay your mortgage if something were to happen to the policyholder and the mortgage borrower. It is sometimes called “mortgage life insurance” because some policies only pay out when you die.  Unlike a life insurance policy, the money does not go directly to you if the policyholder would die. Instead, it goes immediately to the mortgage servicer.

Mortgage Protection Insurance is a “guaranteed issue” which means that they must allow you to enroll regardless of health, age, or status. The only reason why you would get mortgage protection insurance is if you cannot get a “Term” insurance plan. A reason why you might not be able to get a term insurance plan is if you work in a high risk industry or have poor health/existing conditions. 

An important thing to know about MPI is that the payout will decrease over the life of the loan as you make more monthly payments. So the longer you have MPI for, the less money you will receive if something were to happen. This is why a term insurance plan would be better for most borrowers.

If you have questions regarding the information you’re receiving in the mail or anything at all about mortgages, please call us at Chissell Mortgage Group at 727-376-6900.

NMLS ID: 327290; NMLS ID: 2062741

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