A financial product that is increasingly popular is mortgage unemployment insurance. It is an additional feature that is often built into mortgages and is included in the monthly homeowner premium. It doesn’t matter if it’s built into your mortgage or a separate policy. However, it is a smart financial move. It is also important to understand the differences between these two types of insurance. The difference is that mortgage unemployment insurance bought by a third party, if you have less then 20% equity in your house, is intended to protect the lender in case you default on your loan.
Mortgage Unemployment Insurance, and the Economy
You never know when your spouse or the company you work for will close, downsize, or make layoffs because of economic instability. These events can make your finances and personal security very fragile. Many people cannot afford to continue paying their mortgage for long periods of time without being able to work. For anyone who is working to pay their mortgage, mortgage unemployment insurance can be a smart decision.
Avoid defaulting on your loan
You have every intention of paying off the mortgage when you purchase a home. The house will remain your home until you move. Sometimes, however, you may find yourself in financial trouble due to circumstances beyond your control.
When faced with difficult decisions such as whether to feed the family or pay the mortgage payment, it is often easier for the family to win. This can lead to you defaulting on your mortgage payments. These situations can be avoided by purchasing Job Loss Protection insurance. Your unemployment insurance plan will take over if you lose your job, even if it’s not your fault. It will also continue to pay your mortgage so that you can concentrate on other things.
Get the facts
Mortgage unemployment insurance can be a useful insurance type to have. However, you need to be aware of the limitations before making a decision about whether to purchase such a policy. Many plans require you to wait before you can receive benefits. You may not be able to pay your mortgage in this time period so you might want to wait until enough money is saved before purchasing additional protection.
You will not be eligible for job loss protection insurance if you are self employed, part-time, work with family members, or hold a seasonal position. If you are fired from your job, you will not be eligible. You may not be able to receive mortgage unemployment coverage. Before you pay premiums, make sure you aren’t affected by any of these restrictions.