Hello, this is Chad McMann with Protect With Insurance, this is another mortgage protection blog, this one, the topic is, don’t I already have mortgage protection?
And the short answer is, yeah, you might you might have mortgage protection, but it’s not something you automatically get when you get financing, when you get your mortgage. Mortgage protection is not offered by lenders. It’s not offered by mortgage brokers. It’s something that you have to get through a life insurance agency because it’s always built it’s always structured as life insurance. Now, you may have something called private mortgage insurance or PMI, and that’s not the same thing as mortgage protection.
And if someone told you that it is, they sold you a bill of goods, meaning either they lied to you or they’re not educated and informed about how it works and what it truly is. The difference is that mortgage protection pays off the mortgage. That’s what you want, pays off the mortgage upon death and hopefully upon their whole bunch of other things that can happen. They’re called living benefits, you know, get diagnosed with certain illnesses, conditions, things like that, or even just have a heart attack.
And a lot of these policies can pay off the mortgage just then and there while you’re alive, tax free.
But with private mortgage insurance, it does not work that way at all, the way that private mortgage insurance works is if you die, then the lender, they receive a small payout not to pay off the small payout, and it does not change how much is owed.
So if you die, they get paid because it’s a calculated cost to the lender.
When there’s a death of a borrower, they get paid something small. The company does, but all of the mortgage is still owed. None of it is reduced and it’s certainly not paid off. So I hope that this little snippet has been helpful. If you have other mortgage protection questions, please reach out to us any time. Thank you. And stay safe.