For most homeowners, a mortgage is your single largest source of personal debt. Mortgage protection insurance protects you and your family for a specific period of time. Usually, the term is equal to the length of your mortgage term. Unlike the coverage that some banks may offer, your coverage is portable and can remain in place throughout the term of your mortgage loan. Even if you happen to refinance your mortgage with another lender, or if your loan is sold to another banking institution.
Husker Insurance will design your policy in a way, that if the covered primary income earner(s) were to, unfortunately, die during the mortgage term, the death benefit will be paid to the surviving family members, who can then use the funds to pay off the balance of the mortgage. Even though your mortgage balance will decline over time as you pay it down, your beneficiaries will still receive the full amount of the mortgage protection coverage. Any amount left over, after paying off the mortgage loan can be used for other purposes they see fit. It’s your coverage, and we want loved ones to get every last penny of it.
Mortgage Protection insurance is not generally used for income replacement, estate planning needs, or charitable giving strategies. Husker Insurance has other programs to assist in those needs. Our goal with mortgage protection is to ensure that your single, largest asset is safe and covered. We strive that no matter the circumstances; cancer, stroke, heart attack, injury, death… your family will never be in jeopardy of losing their home, as long as you have kept your mortgage protection insurance plan in place.
You work hard to provide for and protect your loved ones in every walk of life. It is time that you find out how an affordable mortgage protection program from Husker Insurance can give you peace of mind and security knowing that you have given your family one of the greatest gifts they could ever receive. The guarantee that their home will always be there for them, even if you can’t be.
Do you need mortgage protection if you already have life insurance?
Generally, mortgage protection is designed to pay off your mortgage if you die, not to provide a cash sum to your dependents. Customers will usually need separate life insurance to provide for a cash lump sum if you have a dependent family.
You can, if you want, use an existing life policy for mortgage protection, as long as the amount you are insured for is at least equal to the value of your mortgage and it runs for the same term.
What happens to your policy if you change your mortgage?
If you pay off your mortgage earlier than planned, it is a good time to reconsider whether or not you need additional life insurance. If you decide to keep your existing policy, it would no longer need to be used to clear your mortgage. Any benefit would be paid to your dependents if you died before the policy is finished. This could be a useful source of additional life coverage. On the other hand, you may decide to take out new life insurance, depending on your age and state of health.
This may not be an option for keeping your mortgage protection policy if the policy was taken out through a group policy with your lender. As lenders will usually close off the policy when your mortgage is cleared.
The option depends on whether you are:
- Increasing or extending the term of your mortgage
- Switching your mortgage
- Paying off your mortgage early
You should not cancel your mortgage protection policy unless you have another policy in place.
If you are Increasing your mortgage, you could get a new mortgage protection policy for the total amount of your new mortgage. Or just for the increased amount of coverage that you have. Compare the costs and benefits of both options. It may be cheaper to keep your original mortgage protection policy going and buy another policy for the increased amount. You should check the cost of canceling the original policy and replacing it with a policy for the full amount of your new mortgage.
Whether you are increasing your mortgage, or extending the term and need to get a new policy, you may find that your premium is higher than the last time you took out coverage. This is because you are older, as your age affects your premium. However, if you have given up smoking, or if rates have come down since the last time you applied for coverage, you may be able to receive a better coverage rate.
If you switch your mortgage, you can simply assign the policy to your new lender. The premium and level of coverage will be the same as before, as long as the amount you borrow and the terms of your mortgage do not change.
- If you have a mortgage insurance policy through your lender’s group scheme, your lender will cancel the policy when you switch your mortgage. You then will have to apply for coverage again however it may cost more, as you will be older than when you first took out the policy. If you are not in good health, you will have to pay a higher premium, or you may not be able to get coverage for everything. Before you switch your mortgage, make sure that you can get mortgage protection insurance, if your current mortgage protection is through your lender’s scheme.
If you pay off your mortgage earlier than planned, you can:
- Cancel your mortgage protection cover and pay no further premiums.
- Keep the policy and pay premiums until the original end date.
If you decide to cancel the mortgage protection coverage, check with the insurance company that the policy has been canceled. Whereas the policy has been arranged through your lender, your lender will cancel the mortgage protection policy on your behalf, but you may want to check to make sure. If the policy has not been canceled by your lender, ask the insurance company what your lender needs to do to ensure the policy is canceled and no more premiums are collected. Also make sure that if you have been paying premiums by direct deposit, that you cancel the direct deposit in writing.