What is mortgage protection insurance?
It helps your family make your monthly mortgage payments if you – the policyholder and mortgage borrower – die before your mortgage is fully paid off. It also can offer coverage for a limited time if you lose your job or become disabled after an accident.
Who is the Beneficiary?
Your mortgage lender is the beneficiary of the policy, rather than beneficiaries you designate.
Fives Variations of Mortgage Protection Insurance:
- Full Payoff - this is typical in a situation where the surviving beneficiary is unable to afford any of the mortgage payment.
- Partial Payoff - this is typical where the surviving beneficiary can afford a portion of the mortgage payment.
- Transfer of Assets - this is typical in a situation where the surviving beneficiary wants to keep the house and title needs to be transferred.
- Equity Protection - this is typical in a situation where the surviving beneficiary wants to sell the house and needs time to get their affairs in order. This includes getting the house cleaned up, cleaned out, listed and sold.
- Reverse Mortgage Protection - this is typical in a situation where the couple is over 60 years old, the surviving beneficiary is unable to afford the payment. They need money to pay the loan down to a 50% LTV (Loan to Value). In this scenario, the only way to eliminate the payment is to reverse the mortgage or payoff the house.