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thomasben2296

Mortgage Protection Insurance

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Mortgage insurance protects the lender in case a mortgage goes bad.  

 

Even though the lender is the sole beneficiary of the coverage, the premiums required by many common mortgage programs (FHA, for example) are paid by the borrower.  The coverage is put in place at the time the loan is originated, and is required by the lender.

 

Mortgage protection insurance is optional and insures the borrower in case of disability or other covered event, and either makes the payments or pays off the balance, depending on the type of event and the coverage purchased.  

 

Without even looking for coverage like this my default assumption - until shown otherwise - is that this is very expensive relative to the benefits when compared to other options like long-term disability insurance and/or life insurance.

Edited by cv91915

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15 hours ago, cv91915 said:

Mortgage insurance protects the lender in case a mortgage goes bad.  

 

Even though the lender is the sole beneficiary of the coverage, the premiums required by many common mortgage programs (FHA, for example) are paid by the borrower.  The coverage is put in place at the time the loan is originated, and is required by the lender.

 

Mortgage protection insurance is optional and insures the borrower in case of disability or other covered event, and either makes the payments or pays off the balance, depending on the type of event and the coverage purchased.  

 

Without even looking for coverage like this my default assumption - until shown otherwise - is that this is very expensive relative to the benefits when compared to other options like long-term disability insurance and/or life insurance.

Thanks for reply cv91915. Very valuable information to share. So if I get mortgage will that include mortgage protection insurance as well or else I need to purchased separately from other lenders.

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7 hours ago, thomasben2296 said:

Thanks for reply cv91915. Very valuable information to share. So if I get mortgage will that include mortgage protection insurance as well or else I need to purchased separately from other lenders.

It's purchased separately.  

 

Please be very cautious with this type of insurance.  Insuring very narrow types of losses and risks can be really expensive, and the sales process is surely designed to prey on your fears rather than appeal to your logic.

 

 

Edited by cv91915

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I used to be in the insurance industry.  The only time I saw a mortgage protection (or auto protection) insurance come close to being better than a term life policy (for the life of loan) was for individuals in high risk professions (think first responders) where traditional life insurance may also be very costly.  I would usually suggest a Term Policy for about the mortgage balance for the life of the loan, it usually was more cost effective.  What was even better, if one could find the term policy with decreasing payout over the term.  

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