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Mortgage protection insurance (MPI) also, known as mortgage payment protection insurance is becoming a much more popular type of coverage in recent years. This can attributed mostly to the sinking housing market and higher unemployment rates. The type of protection is not for everyone, but it may be right for you. Take a few moments to read through this article to learn if this is protection that could benefit you. By understanding mortgage protection insurance, you can make the right decision for you and your family.

Don’t Confuse Mortgage Protection Insurance with Private Mortgage Insurance

The purpose of mortgage protection insurance is to pay your mortgage if specific circumstances arise that prevent you from making your regular payments. Private mortgage insurance (PMI) is a type of insurance that lenders require you to get if the amount of the note is more than 80 percent of the total value of your property. PMI provides protection for your lender if you default on your loan, while MPI provides protection for you by making payments for you or by paying off the balance of the loan.

Mortgage Protection Insurance vs. Other Forms of Insurance

MPI policies generally pay benefits in the even that you cannot pay your mortgage due to disability, unemployment or death. Other forms of insurance can offer protection in each of those instances, there is life insurance, unemployment coverage, and disability protection. However, each of these types of insurance will require three different shopping stints and three different premiums. With MPI, there is need for only one policy to encompass all events. This doesn’t mean you still shouldn’t consider life insurance, as it offers other benefits, particularly as an investment and a way to build your estate.

How Does Mortgage Protection Insurance Payout

A policy that offers mortgage protection will payout in two ways. If death, permanent disability, or critical illness is the reason for the inability to make your mortgage payments, the payout will be in one lump sum for the amount of the remaining mortgage. If the reason is temporary disability or temporary unemployment, the payout is the making of monthly payments that begin after a waiting period and continue for a specified period of time or until you are able again to get back to work.

Why Consider Mortgage Protection Insurance

You may be wondering why you would consider purchasing this type of policy when you already have to worry about insurance for your car, health, home and possibly other items. High unemployment rates are increasing the chances of facing a mortgage without a steady income stream. Mortgage protection insurance is inexpensive and specialized for just the instance when you are unable to make payments on your home. For this reason, it may be worth your while to consider, as it doesn’t take long to shop for a quality policy and most of the shopping you can do online.