In Minnesota, the price of housing is steadily rising. Even modest houses may be several hundred thousand dollars and fancier or larger house cost even more. So even more than in the past, buying a home is a family’s largest investment of their lives. Owning a home is a major part of the family’s wealth and security. It is important that the homeowner protects this major investment. That is why Minnesota mortgage protection insurance is a smart idea.
When the breadwinner is healthy and working at a good job, mortgage problems may not be an issue. But, what happens when disaster strikes? What can a family do if the breadwinner suddenly dies or is incapacitated by disease or injury? What if that person can no longer work?
In addition to the emotional mourning, there will be financial worries.
After the COVID pandemic, we learned that no one can be sure of a healthy future. So, more and more homeowners are looking for the peace of mind of mortgage protection insurance in Minnesota.
What is Minnesota Mortgage Protection Insurance?
MPI or mortgage protection insurance is an insurance policy that will pay off a mortgage if the breadwinner of a family dies. Some MPI policies also cover mortgage payments for a limited time when the person responsible for paying the house payments becomes disabled or seriously ill. This gives the family a chance to adjust to the new situation and decide what to do.
Do not confuse MPI insurance with PMI or private mortgage insurance that lenders require home buyers to purchase.
With PMI the lender is protected, not the homeowner. With PMI, the family would be on the hook for the balance of the home loan when the breadwinner dies.
MPI gives the family a chance to remain in the family home after a person dies. The mortgage would be paid directly to the mortgage company. This gives the family time to make plans for the future with less financial pressure. PMI only concerns the mortgage, all other bills and expenses would still be the family’s responsibility.
What Are the Benefits Of MPI?
- There is guaranteed approval with no medical exams or lab tests. Life insurance requires these tests and may not approve an applicant.
- There is less confusion on how this benefit works. The insurance company pays the lender directly so the family does not have to worry.
- Disability protection is available with this policy and will make a limited number of mortgage payments for the disabled homeowner so they have time to make living decisions.
Shortcomings of MPI
- There is a lack of flexibility when the benefits are needed. MPI pays the mortgage and nothing else. the family does not see the money.
- MPI costs more than a term life insurance policy. Healthy responsible adults might see the most difference. Different insurance types offer different coverages.
- There is a shrinking coverage as the value of the mortgage goes down with monthly payments. The premium remains the same, but the coverage goes down.