To be frank when I see these three words (mortgage unemployment insurance) together, I just don’t see the connection, but you learn something new every day. Over the weekend I read that it may take seven years until we create enough jobs to get back to the level we were at prior to the meltdown in 2008. That being the case, job security is the name of the game. Am I wrong?
So if you think you might be unemployed and looking for a new job, you might consider unemployment mortgage insurance. This is even more important if you want to avoid bankruptcy and foreclosure.
What is unemployment mortgage insurance?
It’s coverage that will pay your mortgage in case you lose your job. You collect if you are laid off or fired without cause. If you quit, retire or get sacked for misconduct, you can’t collect. Also, you can’t collect if you are self-employed.
What happens if I buy the coverage and then lose my job?
There will be a waiting period, usually 30 to 60 days. You have to wait for that period to expire before you collect. At that point, the insurance company starts sending payments directly to your mortgage company while you sit at home watching Jerry Springer on TV – or go out looking for a new job.
How do I buy this coverage?
There are a few ways to buy this insurance. Most people who buy this get a rider on their existing homeowner’s policy. That’s probably going to be your best bet. However, some home builders now offer these policies in an effort to stimulate sales.
What’s the catch?
First, each policy is different, but they typically only pay the minimum amount required to keep your home out of foreclosure. Also, some policies are limited and only pay benefits for six months.
If your job is on the rocks, it might be a good thing to look into. The cost is probably not high. While this is not a replacement for life insurance, the risk of losing your job is much higher than losing your life. For that reason, I think it’s more important to consider – especially when you compare it to mortgage life insurance.
Innovative use of mortgage unemployment insurance:
If you’re trying to sell your house but all the buyers are afraid of losing their jobs, why not offer to pay for a year or two of this protection? That way they may feel more inclined to sign on the bottom line.
Do you own mortgage unemployment insurance? Why or why not?