You’ve most like worked hard to reach the dream of a home of your own, and once you have, it makes sense to try to protect is as much as you can.
If anything happens to you, either death or disability, you probably would like to know that your family will not have the home you have worked so hard to get taken away from them. Mortgage insurance is the means by which a homeowner can assure this. These are known either mortgage insurance policies or disability mortgage insurance policies.
If you are the main breadwinner in your family, if your income stops, either temporarily or permanently, in all likelihood, your spouse would not be able to continue the mortgage payments on the home.
Most people have a hard time contemplating death, so “life” insurance is not an easy concept to deal with. If a family head is worried that his or her family will become homeless because of loss of his or her salary, the most logical solution is mortgage life insurance.
This is the concept behind a mortgage life insurance policy: to pay off the loan so the family can keep the house. One type of mortgage life insurance policy is a decreasing term policy, in which the payout goes down over time, just as a mortgage balance decreases over time.
But the death of the breadwinner is not the only threat to home loan payments-if the homeowner is disabled, he will not be able to afford the mortgage either. In this case, the home loan is paid out of the proceeds of the policy. Despite the fact that some people may have disability insurance from their job or the state, the benefit is often not enough to cover all expenses, and additional insurance such as mortgage disability insurance is necessary.
Many consider mortgage disability insurance more critical than mortgage life insurance because the odds of becoming disabled are much greater than the odds of dying during your working years.
What about the common case when both salaries are needed in order for the home loan to be paid? Just imagine if both income earners were disabled in an accident; since spouses frequently travel together, this is a real possibility.
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