The Ins and Outs Of Mortgage Protection Insurance?

If you are a new homeowner or you recently refinanced chances are you have received many advertisements in your mail box about Mortgage Protection Insurance. The letters may vary in style and wording but they all say pretty much the same thing. "You have not taken advantage of our low cost mortgage protection program, please fill in the information below and send it back as soon as possible."

The problem is these letters or offers often leave you with a lot of unanswered questions. Who sent this letter and how did they get my information? Are they affiliated with my Bank? Do I really need Mortgage Protection? How much does it cost, and is it really a good idea?

First of all where did this letter come from? Well that depends. Sometimes a bank or lending institution may have given your name out to a third party insurance company that offers mortgage insurance and has some affiliation with the bank. On the other hand, it might just be a local insurance agent who is trying to generate business. The affiliated insurance company obviously got your information from the bank they are affiliated with but the insurance agent may have just got your information from the county clerk. You see, mortgages are a matter of public record and anyone with some time on their hands and a little know how can go down to the county court house and look up information regarding your mortgage. For some of you this may make you a bit concerned but it is perfectly legal.

So that is how those letters end up at your door but the more important question is what is mortgage protection insurance and do you really need it? Mortgage Protection insurance is just what it sounds like. It is an insurance policy designed to protect your family in the event that you are not around to pay your mortgage for them. The plan might be set up to pay off the loan if you die or if you become disabled. But to answer the question do you need it depends on a lot of other factors. Do you have dependents that are counting on you to pay the mortgage every month? If you became sick or injured and unable to work how long could you pay the mortgage without your current income coming in? Do you have other life insurance or disability insurance in place? If so is it really going to be enough now that you have taken on more obligations? When was the last time you had a professional evaluate your insurance needs? All of these questions should be taken into account before you make a decision regarding Mortgage Protection Insurance.

After considering all of these questions you still may be trying to figure out if mortgage protection insurance is a good deal for you or not. Again the answer is, it depends, and there are many things about mortgage protection insurance that you may not be aware of. Here are just a few examples.

If something looks too good to be true it usually is. For example many of the plans that are sent out from bank affiliates are very inexpensive so they may seem to be quite attractive however you need to read the fine print or find an advisor that can help you. The catch on these plans usually is that they will only pay off if your death or disability is the result of an accident. What happens if you purchase one of these plans and you have a health concern like, cancer, heart attack or stroke? They won't pay dime one, that's what happens! So be careful that you know what it is that you are buying. Especially if it is being sold through the mail and looks too cheap to be true. Accident plans only pay if you die in an accident, period.

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