Why You Need to Have Mortgage Insurance.

Written By: Heather P. Flory on February 6, 2010 One Comment

Most people work long and hard to pay for a home of their own, and want to protect it.

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. Insurance policies are available that protect the ownership of the home in case you cannot pay your mortgage due to death or disability. The mortgage and insurance industry offer both life insurance and disability insurance on your home.

When the primary salary earner’s income is disrupted, either because of death or a severe disability that prevents him from working, the odds are that the surviving spouse could not keep the home.

No one likes to contemplate the idea of their own death, but a rational family man will make efforts to protect his family in case of such a tragic occurrence. But if you worry about your family, you will worry whether they will be able to keep the house if you die.

A mortgage life insurance policy will pay off the mortgage in case of the death of the insured. A decreasing term life policy is the one that most people choose because the amount of the benefit decreases over time as you are paying down more and more of your home loan balance and the required life insurance benefit is lower.

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 payments either. The monthly mortgage payments will continue to be made during the time the insured is disabled. 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.

There may be even greater reason to have disability insurance, since being disabled is a more likely event in a working person’s life than death.

What about the very usual case when both salaries are needed in order for the mortgage to be paid? It may happen, for instance, that a car accident disables both spouses who were together in the car.

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