What is Mortgage Protection Insurance? Is it a Scam or do I need it?

When you buy a house (or re-finance), you get a LOT of junk mail.
Included in the pile will be a bunch of insurance companies telling you that you need to protect your mortgage with a “mortgage protection insurance” policy. There’s usually some kind of appeal to a mortgage holder to help his/her family stay in the home if he or she were to suddenly die.
iStock_000009976346SmallIs this a good idea or a hoax?
Actually, it’s a good idea for everyone with family who depend on their income to have a term life insurance policy.And that’s what mortgage protection insurance policies are.
Let’s say you have a $250,000 mortgage. These mortgage protection policies are usually going to be giving you $250,000 in term life insurance for the life of the mortgage. The idea is that, if you die, your family can pay off the loan and stay in the home. Sometimes they’re structured so that the policy decreases in value over time (as you pay down the mortgage).
If you just took out a mortgage, we’d advise you to take a look at term life insurance that would factor in not only your mortgage, but income replacement to help take care of those you’d leave behind. The typical recommendation is that you have 8-10 times your income in a 20 or 30 year term life insurance policy.
The good news is those spammy mailers you get are also right about the price. It’s usually pretty cheap to get $250k in term life insurance (assuming you’re reasonably healthy).
If you want to see for yourself, click the orange button to the right – you know, the one that says “Get a term life quote now” – or contact us (there’s a button for that too!) to talk more about your particular situation.