Mortgage Protection Policy

by Sarah Arnette

Overview

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Many people are worried about their ability to pay their mortgages. For people with a mortgage protection policy, this concern is not on their list of worries. Now that the economy is going down and more homes are being foreclosed than ever before, mortgage protection is becoming more popular as a way to avoid losing the house after losing a job or becoming seriously ill.
What Is a Mortgage Protection Policy

A mortgage protection policy is an insurance policy that states that if the owner of the policy loses his income due to illness or job loss, then money can be given to the individual to ensure that the mortgage is repaid during that time period. This period can be anywhere from 12 months to two years, depending upon the policy.

Is It Necessary?

While most lenders do not state that the mortgage protection policy is necessary, for those in a high-risk job field or with bad credit it may be necessary. People who do not need the insurance to complete the mortgage may find that they want the insurance just because they never know what might happen to them in the next 30 years.
When Do You Buy It

Most insurance companies like to sell the mortgage protection policy at the same time as the bank is doing the closing on the house. This way the home's mortgage is covered from the beginning. However, some companies allow individuals to buy the policy years after the closing is complete.
Exclusions of Policy

Somne exclusions are in every insurance policy and the mortgage protection policy is no different. Some common exclusions of coverage can include the loss of a part-timejob, the loss of a job due to a pre-existing medical condition or the job loss occurs during the qualifying period.
Over Covered

If you already have income insurance to cover your income if you should find yourself ill or out of a job, then you may not need your mortgage protection policy. This would mean that money is being wasted on a policy that you will never use. While it is hard to say if you need this insurance, an insurance agent should be able to assist you in being properly covered without being overly covered.