A mortgage is often the biggest financial commitment that most people make in their lifetimes. However, less than half of all homeowners with a mortgage choose to get mortgage protection insurance to protect their ability to pay back their mortgage.
Mortgage protection insurance, also called mortgage payment protection insurance, is a type of insurance that covers mortgage payments if the person who has the mortgage loses their job, gets very sick, or has an accident that keeps them from working. This type of protection insurance is cheap to keep up and allows mortgage holders to set an insurance amount for a monthly protection pay-out that covers mortgage costs and other expenses up to a certain percentage above mortgage costs.
Most mortgage payment protection insurance policies are strict on protection insurance claims. For example, if the person who has a mortgage quits their job on their own, the mortgage payment protection insurance policy would not cover them. But if a person loses their job, the protection insurance policy will pay out as long as the person actively looks for a new job. Also, mortgage protection insurance may not pay out if the claimant gets volunteer or part-time work. However, the terms and conditions for each type of mortgage payment protection insurance will be different in this regard.
Most of the time, mortgage holders have to go through a qualifying period for mortgage payment protection insurance before they can get payment protection pay-outs. Most mortgage payment insurance policies have a qualifying period of 90 to 120 days. If the mortgage holder is still eligible for mortgage payment protection insurance after this period, protection payments begin every month.
Most insurance companies require people who have mortgage payment protection insurance to fill out a form every month to renew their mortgage protection insurance claim. Sometimes, the insurance company will ask the mortgage holder for proof so they can decide if the mortgage holder is eligible to keep getting payments from the mortgage protection insurance. This could be a note from the doctor saying you are sick or copies of job applications if you are claiming a pay-out from your mortgage payment protection insurance because you lost your job. Mortgage insurance payouts are usually sent directly to the mortgage holder's bank account one month after the fact.
Most mortgage payment protection insurance has a set length of time during which payouts are made. Usually, the first mortgage protection payment is spread out over six or twelve months, depending on the insurance company. Since two out of ten people who lose their jobs take more than a year to find a new one, mortgage payment protection insurance could be the difference between keeping your home and losing it.
