Are you considering mortgage payment protection insurance? It’s no lie that these are tough economic times. Everybody knows of a person who was either laid off, released or cut due to down sizing; I am sure we have all have friends and family who have lost their homes and have been launched into difficult situations because they could no longer afford to keep up on their mortgage payments after losing their jobs. No matter who you talk to, the thought of hearing about the loss of your job and your home in one small thought is enough to make any person nervous and filled with fear. Fortunately, something does exist that can put your nerves at ease and help you to relax and no longer worry about what will happen in the future to your job, home or family as it can protect your mortgage.
Mortgage payment protection insurance, sometimes called MPPI for short, is a type of mortgage insurance that exists to cover your mortgage payments in the case of accident, illness or unemployment. There any many different aspects of this type of mortgage insurance that should be analyzed thoroughly before purchasing it. A careful consideration of all of the pros and cons will help you to make an educated decision when exploring different mortgage payment protection insurances.
What Does Mortgage Payment Protection Insurance Cover?
This depends on the type of policy you purchase. The default coverage usually includes only unemployment insurance, hence why it is commonly referred to as income protection insurance. For addition fees, you can also work in accident and illness coverage that will assume your payments for you under these circumstances. Most policies also cover building insurance, which will help to protect you in the case your home becomes damaged and needs to have extensive repairs done which is something those living in natural disaster prone areas should strongly take into consideration.
Your mortgage payment protection insurance will usually cover your groceries, credit cards and other loans. It is always best to check with your provider for a list of their full coverage details. Many of these policies do include other forms of loan payment protection but you can always add additional things and other loans you are obligated to pay to your mortgage protection policy.
Before gaining full policy coverage, there is a standard waiting period of about 28 days before any claims can be made against the policy.
How Are Payments Arranged and How Will I Receive My Benefits?
In the case of unemployment benefits, you will begin to receive your funds as soon as you notify the insurance company that you have lost your job. For accident and illness cases, the insurance company will begin to process your claim once you notify them you are no longer able to work and provide them with all appropriate documentation. Most providers are willing to back date funds and have quick “turn around” times in order to help you receive your money faster. When going with a legitimate mortgage protection company, you should not ever have to worry about waiting months to receive your benefits payments. It is also possible to have your insurance provider send your monthly mortgage checks directly to the bank or loan company that issued your mortgage in order to ensure no payments or missed; mortgage providers are very willing to work with mortgage payment protection insurance companies when it comes to handling these matters.
What Happens If My Mortgage Payment Protection Insurance Company Goes Bankrupt?
You are still covered. There are government agencies in place to protect you and your policy. The first step is for the government to help another loan protection agency buy your policy and assume it; if this does not happen during the time of your claim, the government agency will pick up the tab on your policy until another company is found to resume it.
Mortgage Payment Protection Insurance – Redundancy
The only major drawback and downfall to this type of insurance is something called “foreseen redundancy” which in the most basic terms means no insurance company wants to pay your claim if anything of the following should happen to you: applying for the insurance after switching employment to a company who is going through known financial trouble and cut backs, become injured or ill as a result of a preexisting medical condition or even if you have a history of known financial trouble or if the insurance company deems you to be so deep into debt that the chances of you even making a realistic financial recovery even while receiving payments from them is impossible.
Mortgage Protection Insurance Pros – Quick Overview
- You can specify how much coverage you want and are no obligated to insurance your entire mortgage amount, thus saving you money.
- You can opt-in to include other additional loan obligations such as car, student loan or other real estate you may own
- Coverage can be issued for accident, illness or unemployment
- If you insurer goes broke you are still covered.
Mortgage Protection Insurance Cons – Quick Overview
- If the mortgage payment protection agency does not pay your mortgage lender directly, you might not be entitled to collect government unemployment benefits
- You may not be covered or receive any funds if the insurance company can prove you were in a position of “foreseen redundancy”.
- It may be difficult to get this type of coverage if you have just recently purchased your home. The waiting period from the time of purchase is about 6 months if you did not choose to buy this coverage from the time you originally took out your mortgage.
Mortgage payment protection insurance rates and quotes are easy to come by and should be considered extensively before committing to a policy that is right for you. Be sure to take full advantage of them and consult with legitimate companies until you find what works right for you.