If you’ve ever purchased a home you likely were inundated with Mortgage Protection Insurance advertising the day after you closed. Since traditional home closings are public records, insurance companies and marketing firms purchase that data in order to send out mailers to new homeowners.

Although a lot of these mailers are thrown out as junk mail, the homeowners that do take the time to open and read about mortgage protection insurance typically become prospective clients by responding to the mailer. As a new homeowner, you should also expect some mailers from local home security firms and local insurance agents welcoming you to the area. Here, we will offer tips for finding the best mortgage protection insurance rates.


What Is Mortgage Protection Insurance?


First of all, please understand that Mortgage Protection Insurance does not protect your home or your lender; it protects your surviving loved ones. Here’s an example of how mortgage protection insurance works.

Richard and Sarah Wilson just closed on a $250,000 home which they consider their dream home for them and their two children. Soon after their closing, they receive a letter from a national insurance company telling them how they can make certain their mortgage gets paid off if either one of them were to die unexpectedly.

Richard is the primary breadwinner in the family since Sarah is a homemaker and part-time freelance writer. Richard is concerned that if something were to happen to him, how would Sarah be able to keep up the mortgage payments if he were out of the picture.

After discussing this with Sarah, they decide to purchase mortgage protection insurance for the balance of the loan and the term of the loan. Richard purchases a $250,000 term insurance policy for a period of 30 years to match the terms of the mortgage.

Now Richard and Sarah have peace of mind knowing that if something should happen to Richard, Sarah can pay off the loan and stay in the home with the children.


Why Use Term Insurance for Morgage Protection?


Since mortgage protection insurance is designated to pay off a mortgage, most homeowners elect to use term life insurance since it is the most affordable insurance available. Term insurance can be purchased in 10, 20, or 30-year policy periods which can easily line up with traditional mortgage loans. And, the policies sold today are not “decreasing term” which means the amount of insurance decreases as the mortgage balance decreases.

Today’s mortgage protection policies are written using “level” term coverage which means that the insurance coverage remains level for the life of the policy. This means that if the insured dies near the end of the term, the beneficiary will be able to pay the mortgage off and pocket the remainder of the death benefit.


What if Both Spouses Work?

young married couple


There is good news here. Since mortgage protection insurance rates are very affordable, a policy can be purchased for each breadwinner for very little premium. In fact, a young married couple can typically get mortgage protection on both spouses for about $50 or $60 per month depending on the amount of coverage you need. Additionally, if either spouse wants to customize their policy to broaden their coverage or add living benefits, most insurance companies offer various riders for a minimal additional premium.

Here are the optional insurance riders that every applicant should consider:

  • Accelerated Death Benefit – Although most insurance companies offer this rider as part of the policy core benefits, in some cases you may need to add it as a rider. The Accelerated Death Benefit provides for the insurer to advance a large portion of the death benefit to the insured if he or she is diagnosed with a terminal or critical illness. The accelerated death benefit is then deducted from the death benefit when the insured passes away.
  • Disability Income Rider – This rider is very important because individuals under age 50 are more likely to become disabled than to die unexpectedly. With this rider, the insurance company will pay a monthly benefit while the insured is disabled which will help the insured make the mortgage payment when they are unable to work.
  • Waiver of Premium Rider – This rider provides for the insurance company to waive the insurance premiums that are due while an insured is disabled and cannot work thereby helping the insured keep their policy in force.


How Can I find the Best Mortgage Protection Insurance Rates?


Fortunately for applicants, there are many insurance carriers that sell term life insurance and you can shop your policy with virtually all of them by using an independent insurance agent. The Elm Group and Associates are a team of experienced and reputable insurance brokers who can answer all your questions about Mortgage Protection Insurance and shop your plan with all or our highly rated insurance carriers.

Here is an example of actual rates for the example we used above. These rates are for a $250,000 policy with a 30-year term. The applicant is a 30-year old male non-smoker in very good health:

term insurance rates


These rates are for a $250,000 policy with a 30-year term. The applicant is a 30-year old male non-smoker in very good health:

30 year term rates for 30 yr old female


Using an independent insurance professional like The Elm Group and Associates will make your shopping for affordable Mortgage Protection Insurance quick and easy. Just send us a little information on the form below and an agent will get back to you with a confidential no-obligation quote for your insurance policy.


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