Pros and Cons of Mortgage Protection Insurance

Mortgage protection insurance (MPI), which is a type of life insurance, ensures your mortgage will be paid in case the worst happens. Your loved ones can have a home without the burden of mortgage payments. However, like all insurance-related decisions, this is an option you must weigh carefully. Before enrolling, it’s a good idea to consider the upsides and downsides of MPI.

How Does MPI Work?

With MPI, you sign up for coverage lasting a certain number of years. The amount of time the policy is active is tied directly to the length of the mortgage. If you pass while the policy is active and you still owe on your home, the funds released will cover the remaining mortgage, with your mortgage lender being the sole beneficiary.

What Are The Pros?

The pros are seen in how easily acquired the policy is and its efficacy in covering costs. This policy provides exactly what you signed up for – no more, no less. 

Many insurance policies require medical underwriting, often going as far as requiring a medical exam. That’s not the case with MPI. If you’re an individual in poor health, this is great news because your health isn’t a factor when the insurer determines premium costs.

Another great quality is how MPI goes into effect. If you pass away while the policy is active, your mortgage will be paid almost immediately. Your loved ones won’t have to make any financial sacrifices on their own because your home’s mortgage will be paid in full.

What Are The Cons?

MPI’s cons revolve around its lack of flexibility and relatively high price compared to other life insurance options with the same coverage. This is especially true for those looking to get more from their life insurance policies.

You can’t name beneficiaries with MPI. The funds do not go to your loved ones, and because of this, you won’t be able to help them with other debts. Mortgages aren’t the only living expense your loved ones will have after you pass away.

A term life policy may be the better choice for some, as you have more options with how long it lasts and how much coverage it will provide. You can also renew the coverage at the end of the policy’s term. Fortunately, you can have an MPI policy and a traditional life insurance policy at the same time.

Get Your Coverage Today

Whatever the right life insurance policy is for you, All Things Insurance will help you through the process of securing coverage. Call us today at (763) 645-5450 to learn more about mortgage protection insurance and why it may be right for you.