The Situation Today
In today’s volatile financial market, mortgage protection is a definite must have. Overnight we have seen rock solid companies crumble and fall like shattered bricks before our eyes. The former stalwarts of Wall street have become casualties of war.
Who ever thought one morning we would wake up to hear Lehman Brothers and Merrill Lynch are no more? Did you ever fathom AIG would be on the brink of collapse or that the Federal government would have had to bail out Freddie Mac and Fannie Mae?
Most of us probably could not see that far. Unfortunately neither could the over 70,000 former employees now left jobless and on the bread line. Not only do they have families to feed but mortgages to pay. If you were one of those employees, how would you fare?
The Importance of Mortgage Protection
Before we could fully understand how this safety net could protect us, we first need to understand what it is. Mortgage protection is simply an insurance policy that you take out to protect your mortgage payments.
This policy can be tailored to carry various benefits. These include:
* Life insurance – This covers repayment to the lending institution in the event of your death. Without it, in addition to your spouse and children having to deal with your loss, they would now have to struggle to keep their home and make ends meet.
* Unemployment – Should you suddenly find yourself out of a job, having a mortgage protection policy with this benefit would surely be a big relief. It would ensure that your greatest material asset is secure since you would have a monthly income to cover it.
Some may argue that this type of coverage is not necessary since the state could provide such protection in case you were to lose your job. However, if you had your mortgage since 1995 you would be unprotected for the first nine months of unemployment. This is because it takes that long for state benefits to kick in. Are you willing to take that risk?
* Critical Illness or Accident – At a time when medical bills may be sapping your financial reserves, do you really want to have mortgage payments to worry about?
Unarguably mortgage protection is a must have in today’s world. Keep in mind though there are different types of policies offering different types of coverage.
Some policies offer protection for up to two years of unemployment. Longer coverage means higher premiums, so take time to understand what you are covered for.
Therefore, ensure that you put things in place to keep your roof over your head and your family out of the rain in case of any eventuality.