Mortgage protection insurance (MPI) is often recommended by the mortgage lender each time a person takes out a mortgage. This insurance is obtained if you want to cover your loan payments in case of unemployment, disability or death.
However, do you need mortgage protection insurance? This decision should be made in accordance with your health and financial situation. This article will cover some advantages and disadvantages of mortgage protection insurance.
Mortgage Protection Insurance: Advantages
One of the upsides of MPIs is that they are usually granted based on “guaranteed acceptance.” This means that once you apply for an MPI, it is relatively easy to obtain coverage.
For people who have health issues, this is incredibly beneficial because they typically either cannot get insured or can only obtain insurance at high rates.
Additionally, MPIs are a good investment for people who have jobs that are high-risk of injury, such as roofers.
You should consider these factors when deciding if you still want to obtain an MPI after factoring in all the other costs of being a homeowner.
Mortgage Protection Insurance: Disadvantages
Some people believe that obtaining an MPI is a waste of money. This is because MPIs are a declining-benefit policy – the amount to be paid out by the insurance company decreases as you gradually pay off your mortgage, even though you must pay premiums for the MPI for the duration of your mortgage period.
Obtaining a mortgage protection insurance can be a good choice in case you have health issues or work in high-risk jobs. However, it is vital to carefully research the most suitable insurers before signing up for an MPI.