Research
PMI VS MPI
Private Mortgage Insurance (PMI):
- Is a type of mortgage insurance you might be required to buy if you take out a conventional loan with a down payment of less than 20% of the purchase price.
- PMI protects the lender in case the borrower can't pay their mortgage.
Mortgage Protection Insurance (MPI):
- Is a life insurance policy structured to have enough face amount to cover the full or partial loan amount on a mortgage in the event of the borrower's untimely death.
- A homeowner (typically the main breadwinner) purchases this policy so when he/she passes away, the policy will payout to their beneficiary (their surviving family) so they can use the money to pay the loan amount that it was structured for.
The most popular MPI structure that is most affordable is to have enough coverage to keep up with the mortgage payments for a specific period of time to ensure they don't lose the equity of their home. This allows for the surviving family to mourn while paying their mortgage and have enough time to decide if they will even sell and if they do; they can market the property for sale in a smart way rather than in a hurry which can cost them thousands of dollars for a quick sale.
i.e. Say we have a 35 year old male, homeowner, non smoker with preferred health in CA that has a monthly $3,000 mortgage payment, 25 years left on his loan and wants 5 years of mortgage payments worth:
- $3,000 x 12 months = $36,000 a year
- $36,000 x 5 years = $180,000
- Say you round up to $200,000 for those "unexpected final expenses"
- *Client may apply to get a 25 year Term Life with Living Benefits with a face amount of $200,000 for only $30.10 monthly premium.
As you can see, this is a "no brainer". The peace of mind this type of Mortgage Protection structure offers is second to none and the reason why many homeowners chose this type of strategy.
-Joe M.
*Quote based on a 35 year old male, preferred non-smoker risk, CA resident. Quote by Transamerica Life Insurance Company. Quote subject to change.
