Homeownership is the ultimate American dream. But, unfortunately, this dream can become shattered if a loved one dies and the surviving partner or child cannot make the mortgage payments. One way to prepare for the unexpected and protect that American dream is by purchasing a mortgage protection insurance policy.
Mortgage Protection Insurance Prevents Bankruptcy
Monthly mortgage payments typically aren’t cheap and are usually paid using the income of two partners. If a spouse passes away, the surviving spouse is then responsible for paying the total amount of the mortgage on their own. After a loved one dies, having to pay all the bills alone can lead to the surviving spouse filing for bankruptcy protection.
Many families feel protected in the event of a loved one passing, assuming that life insurance policies will cover the bills. But, more often than not, life insurance policies the person had do not cover all of the medical bills, funeral bills, household bills, vehicle loans, and the mortgage after the person passes. Mortgage protection insurance can step in, cover the mortgage completely, and keep the surviving spouse and children in their home.
This Type of Coverage Protects Credit Scores
Unpaid bills can hurt a person’s credit. A negative mark on a person’s credit score from home foreclosure or bankruptcy can haunt someone for seven to ten years. However, suppose a person cannot pay their mortgage due to a spouse passing or another situation covered in the mortgage protection policy. Utilizing their coverage means that the mortgage still gets paid and the person’s credit stays intact.
MPI Can Help When a Person is Still Alive
Some mortgage protection policies help people avoid bankruptcy even when they are still alive. Specific policies offer additional protection that assists people with their mortgage if they involuntarily lose a job, are injured in an accident, or become sick. This additional coverage is referred to as an add-on insurance rider.
Help with Medical Bills After a Loved One Passes
While many people assume that this type of insurance only helps with the mortgage, there are some circumstances where the policy can pay off the medical bills of the deceased partner, parent, or loved one. For example, if the policy has a higher value than the amount owed on the home, the difference may be used towards the deceased’s medical bills. This is just one of the many ways this type of insurance protects the surviving spouse and their children.
The Importance of Credit Protection
If a loved one has died and the surviving family member cannot pay the bills and the mortgage, their credit score can be negatively affected. If the surviving spouse has to file for bankruptcy, they may find it impossible to finance a car, a home, or even land a successful job. Lenders and prospective employers rely on credit scores before lending money or offering jobs.
Mortgage Protection Insurance Protects the Family
Losing a loved one is never easy. By purchasing a mortgage protection insurance policy, everyone can rest easy knowing the surviving spouse and the children are protected. The family will not have to worry about losing their home, and this type of insurance is known to help prevent bankruptcy and home foreclosure.