Mortgage Insurance: Worthwhile or Not?
(translated article from Leven Wonen)
Imagine that due to unemployment or disability, your income suddenly decreases. It can be difficult or even impossible to afford rent or mortgage payments. Do you want to eliminate this risk? Then a mortgage insurance policy can provide a solution.
A mortgage insurance policy pays out a periodic or one-time amount if you become unemployed and/or disabled. With that money, you can cover a portion of your monthly expenses for a certain period.
When is it not necessary?
A mortgage insurance policy is not always necessary. Perhaps you have sufficient savings, can easily reduce other costs, or your partner’s income is high enough to sustain you. Sometimes, you can take advantage of a collective insurance policy offered by your employer, or you may already have standard coverage in that way. Additionally, the government provides financial safety nets in the form of unemployment benefits (WW) and disability benefits (WIA).
When is it necessary?
Do you expect that the aforementioned options won’t be sufficient in the event of unemployment or disability? In that case, a mortgage insurance policy is an option. You can choose to receive benefits in the case of unemployment, disability, or both situations. However, keep in mind that the periodic benefits are not indefinite and will cease after the agreed-upon time.
For a mortgage insurance policy, you pay a monthly premium. The amount depends, among other factors, on the coverage amount and whether you want to receive the money immediately upon unemployment or disability, or after a few months or a year.
If you want to take out a mortgage insurance policy, you’ll need to fill out a medical declaration. Based on that information, the insurer may decide to reject your application or calculate a higher premium. Also, be aware that the conditions are often quite strict. For example, many mortgage insurance policies do not provide coverage for disability resulting from mental health issues.
A mortgage insurance policy is a fairly complex product. If you want to take one out, it’s wise to discuss it with an expert first. As Recognized Financial Advisors, we are such experts. Together, we will assess your situation and preferences, and we can assist you in finding the mortgage insurance policy that best suits you. Feel free to contact us for more information or to schedule an appointment.
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