Mortgage Protection Insurance: What Is It?
Being Unemployed Doesn't Mean Losing Your Home
Mortgage protection insurance may be more important now than ever. These days, job security is a thing of the past for many Americans. Companies that manage to stay afloat in the current market are usually forced to cut staff. Employees, who have worked in the same position for years, even decades, can find themselves out of work. But should a person who has fallen victim to the current economy lose their home, too? The biggest debt many families suffer from is their home mortgage. It’s a perilous time for homeowners; the loss of income can result in the loss of one’s home. One of the best ways to prevent that outcome is through mortgage protection.
What is Mortgage Protection Insurance?Mortgage protection is an insurance coverage a homeowner can purchase to ensure that—in the event that they lose their job or they are otherwise unable to continue mortgage payments—their mortgage will be paid by the insurer. Nearly 15 million Americans are currently unemployed; that’s 15 million people who have suffered a loss of income. If you are willing to protect yourself (and your family, and your home) from a possible job loss, then you should consider buying some form of mortgage protection. How to Protect Yourself From Losing Your Home Mortgage protection can offer you a considerable amount of protection on your home. But to guard against coverage gaps, homeowners should include a job-loss rider. A job-loss rider prevents your home from falling under foreclosure and will allow you to keep your home while you search for employment.
Factors That Affect Mortgage Protection Insurance CostInsurance agents will use several factors to determine what premium you will be charged for your mortgage protection insurance. Some of the factors will depend on the following:
- The likelihood that you will become unemployed: If your employer, your industry, or your local area has been slashing jobs left and right, that may mean your job is even less secure than some. The job market has a significant deciding factor on your mortgage protection premium. The higher the risk that you may lose your job, the more your mortgage protection insurance may cost.
- Cost of your mortgage payments: If you are currently making modest mortgage payments, your mortgage protection is most likely going to be significantly more affordable than a homeowner who lives in a million-dollar home. The more affordable your mortgage, the more willing your insurance provider will offer your inexpensive mortgage protection coverage.
- The Recession. If projections show that the job market and the economy are going to worsen in the near future, that, too, will affect your mortgage protection costs. As the risk goes up for insurance providers, so do the costs to policyholders.