Mortgage protection is a type of insurance that helps homeowners cover their mortgage payments under certain circumstances. Here are some key points to know about mortgage protection:
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What it is: Mortgage protection insurance (MPI) is an insurance policy that can help your family cover your mortgage if you die or become too disabled to work. It pays off the balance of your mortgage when you die, and your heirs can keep the house.
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How it works: MPI pays the lender directly and lines up exactly with your mortgage balance. The death benefit from an MPI policy typically decreases as you pay off your mortgage, while your premiums stay the same.
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Who might need it: MPI can be useful for homeowners with underlying health conditions that could affect their long-term well-being, those employed at high-risk jobs, or young people having difficulty getting approved for a life insurance policy.
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Alternatives: For many people, a term life insurance policy can be a cheaper, more flexible option than MPI.
Its important to note that mortgage insurance, which is different from mortgage protection, is an insurance policy that compensates lenders or investors in mortgage-backed securities for losses due to the default of a mortgage loan.
