Budgets and Money

Understanding Mortgage Unemployment Insurance

In today's economy, we often worry about downsizing or losing our jobs. Mortgage unemployment insurance may be a way to provide peace of mind and help you remain in your home in the event of job loss.

How Can I Get Emergency Cash to Help Cover My Mortgage If I Lose My Job?

Given the slow but steady improvement in unemployment rates, many Americans are easing back into home-ownership - albeit with caution. But with the effects of the Great Recession still lingering, you may be looking for some type of safety net of emergency cash, in the event you get laid off, to help you prepare for the unexpected. For some people, mortgage unemployment insurance may be a good option.

What is Mortgage Unemployment Insurance?

Simply put, mortgage unemployment insurance will pay your mortgage if you are laid off or fired without cause. The purpose is to keep your home out of foreclosure while you are looking for work. Keep in mind that you probably won't be able to collect a dime if you quit or are fired due to misconduct. And in most cases, you can't collect if you are self-employed. Coupling this insurance with other ways to stretch your family budget could help to keep your family's financial future in tact.

How Do I Get Coverage?

Generally, you can buy this coverage as a rider on your homeowner's policy, although it can also be offered as a supplemental commercial policy through a broker.

How Long Will I Have to Wait to Get the Emergency Cash Needed to Make My Mortgage Payments?

Depending on your policy, you may be subject to a waiting period ranging anywhere between 30 to 90 days. So before your benefits kick-in, you'll have to wait until that certain time period has expired. Keep in mind that your payments will be sent directly to your lender - not to you. Also, some policies are limited in the fact that they'll only pay benefits for six months.

If you're laid off from work, it can be difficult to meet financial obligations such as mortgage payments, on state unemployment benefits alone. Although state unemployment systems are designed to replace about 50 percent of a worker's lost income, they can be capped at a fixed dollar amount that varies by state. The fact is, a job loss often comes without warning. If you find yourself fearful of being laid off and having the emergency cash to make your mortgage payments, then you may want to consider mortgage unemployment insurance.

For information on budgeting as well as covering your mortgage with mortgage life insurance, visit the Protective Learning Center.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

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