Mortgage holders often question whether they need accidental death mortgage protection life insurance. This type of coverage pays when a person dies in an accident but does not cover death by disease. Before making this purchase, a person must know what to look for in this type of policy and when it should be purchased.
When Does This Type of Coverage Pay?
The only time an accidental death insurance policy kicks in is when the mortgage holder dies in an accident. In the event the individual dies of other causes, the beneficiaries of the policy receive no money. Most people die of a disease or illness rather than an accident.
In fact, the CDC reports the top three causes of death in 2021 were heart disease, cancer, and COVID-19. Accidents come in at number four. This shows that every person needs to understand their risk of dying prematurely and plan accordingly to ensure their loved ones are protected at their demise.
When Should This Protection Be Purchased?
Most mortgage holders purchase a guaranteed coverage mortgage protection life insurance policy. This type of policy pays out regardless of how the mortgage holder dies.
If the person cannot afford the full amount needed to cover their remaining mortgage balance, the option of purchasing a lowered guaranteed coverage amount and supplementing this with an accidental policy exists.
Men and women who are healthy and at low risk of disease or illness-related deaths may wish to consider this option. However, certain people benefit greatly from an accidental death policy.
Who Needs an Accidental Death Policy?
Countless men and women today earn a living as a driver. Truck and bus drivers come to mind, but numerous men and women make a living or bring in extra income doing side gigs such as Uber or Door Dash.
The time they spend on the road increases their risk of dying in an accident. Therefore, they should consider supplementing with this type of coverage.
In addition, people who work in dangerous industries, such as construction or agriculture, should purchase this additional protection. Hunting, fishing, and forestry also serve as industries with high accidental death rates. Men and women working in these fields need this type of coverage to protect their loved ones.
Budgeting for this MPI
Men and women who now have life insurance may find they don’t have much in their budget for a supplemental plan.
However, they can purchase additional coverage to lower the remaining mortgage amount. This allows their loved ones to refinance or find other options to continue paying the mortgage.
However, the only time accidental death mortgage protection life insurance should be used alone is when the mortgage holder cannot afford other protection or cannot get it for some reason.
Accidental Death Policy Exclusions
This type of policy comes with many exclusions people must be aware of. For example, the policy likely won’t pay if the person dies in an accident while engaging in a felony or attempting to commit a felony.
If the injury is self-inflicted, the policy won’t payout and the same is true when they are using drugs or alcohol unless the drug is a prescription medicine taken as directed by a medical professional.
If the person dies in an accident while under the influence of alcohol or drugs, the insurance company is not required to pay the benefit, and the same holds when the individual dies while traveling abroad for more than 14 days.
These serve as only a few of the many exclusions that may be found in a policy of this type. The mortgage holder must carefully review the policy and ensure they understand what is and is not covered.
Cost of Accidental Death MPI
Accidental death coverage costs less than many people realize. In fact, a person may pay as little as $8 a month for up to $250,000 in coverage. Many people choose to buy this coverage in addition to a mortgage protection policy.
However, experts recommend keeping the accidental death policy separate from the mortgage protection policy. They can then stop the accidental policy if they find they no longer need it or must cut their budget due to their financial circumstances.
When purchasing mortgage insurance, make certain you know what you are getting. Accident-only policies often come with low rates due to the limited coverage. Most people only purchase this type of protection as a backup to their main mortgage protection policy.
It is particularly beneficial to men and women working in dangerous industries. However, for those who have life insurance provided by their employer and want an added layer of protection, this type of policy is a wise move.