Buying a house is both a big commitment and investment, so it is important to make sure you're protecting yourself from unforeseen losses through insurance coverage.
If you're like most people, you probably have questions about the different types of insurance products available for homeowners. Let’s face it: if you’re not in the insurance industry yourself, it can be a little more than a little confusing to understand the benefits of different insurance plans and what you need to effectively protect yourself. In this blog post, we’ll explore two common insurance products – Mortgage Protection Insurance and Homeowners Coverage – to help clear up some of the confusion about what they are and what they do.
If you've taken out a mortgage to buy your home, you may be wondering if you need to buy mortgage protection insurance. Don't confuse this type of insurance coverage with private mortgage insurance, or PMI. PMI is a product that protects your lender in the event you default on your loan, and may be required if your down payment is 20% or less of the purchase price. PMI does very little to protect the homeowner, and is there instead to protect your mortgage lender.
Mortgage protection insurance, sometimes called MPI, is a different product that can kick-in to protect you as a homeowner if you are unable to make your mortgage payment because you lose your job, become disabled, or pass away. Simply put, MPI is there to protect you and your family if you cannot make your payments.
Understandably, different insurance companies offer different MPI products, but generally speaking, MPI designed to pay death benefits will mail a check directly to your mortgage lender if you die. If you become disabled, your MPI insurer will make your mortgage payments for a defined period of time, although there may be a waiting period before those payments are received.
Typically, basic MPI policies only cover your principal and interest for your mortgage, so you may still be responsible for any additional payments for things like homeowner's insurance and property tax payments that are maintained in an escrow account by your lender.
While MPI is generally optional coverage, homeowners who have mortgages are usually required to purchase a minimum amount of homeowners insurance on their home.
Homeowners insurance protects your home from damage to the structure and its contents, and protects you as a homeowner against legal liability if someone is injured in an accident on your property.
There are several different components to homeowners coverage. Some of the most important elements include:
Everyone's situation is a little bit different, and there are no one-size-fits-all solutions when it comes to insurance needs. Talk to your insurance professional to find out what types of insurance coverages and policy options will best help protect you against loss.
At Symmetry Financial Group, we have access to products from multiple insurance carriers, so we can shop for the policy that will best meet your needs, goals and budget. Connect with one of our agents to receive more information and a customized quote today!