Mortgage Protection insurance is a great way to protect you and your family from an illness or bodily injury that would cause a death.  This type of Insurance is a little different than mortgage disability insurance.  The idea behind these types of insurance is straight: You pay a exchange premium, which stays the same for the length of the policy. If you die during that time period, the policy compensates your family and pays off the remaining balance of the mortgage that is left. This guarantees that your family can stay in the home and a loss of life does not force them out of the house.

Mortgage protection insurance is required if the lender is unable to pay a certain required level of down payment on lending a property. Having it will protect the bank and the lender in the event the lender is unable to pay the mortgage with reasons such as disability caused by illness or accident, death and involuntary unemployment. Additionally it is a noble way to protect the family of the lender from acquiring debts when he won’t be able to pay his debt, especially if the borower has many dependents.

Mortgage Protection insurance is much like life insurance accept it only covers the mortgage of the house and not a large payout.  Many times you can get approved for this type of policy when you happen not to qualify for life insurance plan.  This can ease the mind of any homeowner who is looking for a way to protect his family if he or she happens to pass.

Mortgage Protection Insurance is Not PMI Insurance

Do not confuse mortgage protection insurance with private mortgage insurance or PMI. PMI is a type of insurance that mortgage lenders require you to obtain if you do not put a down payment of at least 20 percent on your home. PMI protects the lender, not you. Once your principle balance on your home mortgage dips below 80 percent of the appraised value of your home, you can have it removed.

Mortgage Insurance Policies Differ

It depends upon the policy as to what a mortgage protection policy will actually pay. If you get mortgage life insurance, most policies pay off the entire balance of your mortgage in the case of your death. If you have mortgage unemployment insurance, then policies will pay your monthly mortgage payment.

Mortgage disability insurance will pay your monthly mortgage if you become disabled temporarily or permanently. If it is a permanent disability, there will generally be a time limit as to how long you can collect the benefits of the mortgage protection insurance.

These policies will pay an agreed upon amount that correlates to your mortgage payment. It may pay only the principle and interest, or it may pay principle, interest, taxes, and insurance. It depends upon the policy you choose.

MPI Pays a Cash Benefit for a Specified Time Period

Unless you get mortgage life insurance, which pays off the mortgage completely if you die, there will be a limit on the period of time for which you can collect cash benefits. These limits can be anywhere from three months to three years.

Those policies with the longer period of payment will carry with them a higher premium. When choosing the right mortgage protection insurance for you, you should consider what is more important. You may only need help with your mortgage payments for a few months while you hunt for another job. If you become disabled, you may need to have a longer payment period during your recovery.

There is a Waiting Period Before Collecting MPI Benefits

Virtually all mortgage protection insurance policies will require a waiting period before you are able to collect on a claim. Most will not honor a claim against the insurance policy if it is made within the first six months of your policy.

Also, most policies will require that you be unemployed for a certain amount of time before the cash benefit will be paid if you have mortgage unemployment insurance or mortgage disability insurance.

Mortgage Protection Insurance May Pay if You Go On Strike

If you are a union worker and your union goes on strike, you may be eligible to collect the benefits of mortgage unemployment insurance. Many policies have this as an option, though not all. If you are a union employee, you should make sure your mortgage protection policy has this as an additional protection against unemployment.

Mortgage protection insurance should not be lightly disregarded in the current economic climate, nor should it be purchased haphazardly. Take the time to learn about this new and possibly helpful type of insurance and get quotes from mortgage protection insurance providers.

Mortgage protection is an insurance policy that pays your mortgage in full in the event of your death or, if you meet qualifying criteria, will pay your monthly installment for a designated allotment of time.

Not all policies are alike, nor do they cost the same.

Types

There are three primary types of mortgage protection policies: mortgage life---pays in the event of death; mortgage disability---pays in the event of illness or loss of income; and private mortgage insurance---lender required mortgage insurance based on insufficient equity in the property.

Cost

Your mortgage insurance cost is influenced by economic recession, the job market in your field, the amount of your mortgage and where you purchase the policy.

Borrower Cancellation

If your mortgage includes a mortgage insurance premium required by your lender, the Homeowner's Protection Act allows for borrower-requested cancellation of the PMI, providing the loan is current and there are no late payments over 30 days.

Lender Cancellation

HPA provides for automatic termination of the PMI when the loan is reduced to 78 percent of the property value and all terms of the loan are in good standing.

If  you have further questions feel free to contact Canada Insurance Plan