Posted by Heather P. Flory | Posted in credit | Posted on 13-02-2010
If you have slaved for a number of years to obtain a home, you probably have thought about ways to protect it.
You may have fire and other physical insurance, but what if something happens to you, and you may lose the home? Mortgage insurance is the way a homeowner can manage this. The mortgage and insurance industry offer both life insurance and disability insurance on your home.
If a family loses the income of one or both of the main breadwinners, it is almost guaranteed that the home loan will not be paid and the home will be forfeited.
No one likes to consider the idea of their own death, but a rational family man will endeavor to protect his family in case of such a tragic occurrence. But if you worry about your family, you will worry whether they will be able to keep their home if you pass on.
A typical mortgage life insurance policy will provide a benefit that can pay down the balance of the mortgage on your residence. Most mortgage insurance policies are decreasing term, which means the amount of the policy reduces along with the outstanding balance of the mortgage.
The other type of in demand mortgage insurance is disability insurance that will assure that the mortgage will be paid, even after the primary salary earner is no longer earning any income. The monthly mortgage bill will continue to be made during the time the insured is disabled. Some people think this is not a necessary insurance if they have disability insurance at work, but be aware that standard disability insurance only covers 60 to 70% of the salary, and that may not be enough to pay all expenses, including the home loan.
There may be even greater reason to have disability insurance, since being disabled is a more likely eventuality in a working person’s life than death.
There is the added complexity that many households could not even afford a home if both partners were not employed, and they should have a joint policy. Just envision if both income earners were disabled in an accident; since spouses frequently travel together, this is a real possibility.
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