Updated February 15, 2024.
Mortgage unemployment insurance, otherwise known as job loss mortgage insurance, is a type of policy designed to protect families and their homes when homeowners lose jobs. Most families require two incomes to get by, and mortgage payments are usually their largest monthly expenses. If you’ve lost a job, you might have trouble keeping up with payments even if your spouse is still working. That’s where mortgage protection insurance for unemployment comes in.
How Does Job Loss Mortgage Insurance Work?
You may think that if you have a mortgage protection unemployment policy in place, you won’t have to worry about what will happen if you or your spouse lose a job.
However, mortgage protection insurance does not always include unemployment protections in the plan. In fact, in order to protect your mortgage during the loss of a job, you will need to include an insurance rider is your MPI policy.
It’s important to read the fine print before signing up for a new mortgage protection insurance policy. Many policies state that they will offer to waive mortgage protection life insurance premiums for up to six months. That doesn’t mean the policy will cover payments on the mortgage.
The purpose of mortgage protection unemployment insurance clauses is to make sure that homeowners who lose their jobs can keep their mortgage protection coverage in place. It isn’t to help them keep up with mortgage payments.
Why Mortgage Protection Unemployment Insurance is Important
Homeowners can become unemployed in many ways. Some get laid off as businesses downsize, while others are incompetent at their jobs, or even engage in theft, fraud, or another criminal act.
While good, hard-working Americans lose jobs every day and they deserve financial protections, there are even more people out there with bad work ethics who would take advantage of these kinds of provisions.
Having an unemployment rider in your mortgage life insurance policy can protect you from any form of employment loss that isn’t from your own doing. That means quitting or being fired for cause are not valid means to collect on your policy.
When Should I Get Unemployment Mortgage Insurance?
Most families are just a paycheck or two away from struggling to make their home payments. Living below your means, maintaining a strong emergency savings account, and having a solid financial plan in place can make weathering periods of unemployment less stressful.
That being said, anyone can be caught off guard by a job loss. If you work in a fluctuating industry or feel that your employment might be on shaky ground, then having unemployment protection insurance for your mortgage is a no brainer.
The most important thing is to keep your mortgage payments low, then put any extra money you have as a result into an emergency fund that could be used to continue paying monthly bills during periods of unemployment.
Is Job Loss Insurance for Mortgage Worth It on a Tight Budget?
Families that are struggling financially often cut their mortgage protection insurance coverage. Unfortunately, if the household earner dies, that means the rest of the family will lose the home.
Mortgage protection insurance doesn’t have to be expensive, and having a mortgage unemployment insurance policy can save you in the long run.
For less than $1 per day, you can protect your ability to pay your mortgage with MPI. Check out our mortgage life insurance calculator to see how much a mortgage protection unemployment insurance policy will cost you.