Mortgage Protection Plans

What is Mortgage protection?

Mortgage Protection is a concept of using insurance products to put aside money to pay off your mortgage in case of death, accident, illness or disability. 

 

Isn't this the same as PMI?

NO! This is not the same as PMI! PMI, which stands for Private Mortgage Insurance, pays your lender if you pass away before your mortgage is paid. The bank, or lender, are paid directly from the insurance company the full amount of your original mortgage. Even if you have most of your mortgage paid off, they would still receive the full amount of the policy. That extra, the money you already paid into the mortgage? Doesn't matter, they still get the full amount! 

 

PMI can be cancelled, once you have reached 20% equity in your home. In plain English, once you have paid off 20% of the value of the purchase price, you can then drop the PMI. 

 

So what is Mortgage Protection?

Mortgage Protection Insurance is designed to protect your family, not the bank or lender! With MPI, the lender is still paid, but the remaining balance, what wasn't paid to the lender goes to your named beneficiary.  

 

There are different types of Mortgage Protection Insurance, depending on what your family's plan will be with your house once you pass.  Below are the explaination of the different plans and how they work.