Mortgage Insurance is a necessity if you're in the market for a long-term mortgage loan. With all the other financial commitments you're making, from hiring assessors to paying solicitors, it's hard to imagine paying even more for an insurance policy. Not doing so, however, is one of the biggest mistakes you can make, especially when you consider that your marginal costs are tiny when compared with that of your mortgage itself.

Most lenders won't even approve a loan without some form of insurance. If you are injured or killed in the course of paying off your mortgage, who is going to ensure that your creditors are repaid? Just because you're gone doesn't mean a lender is expected to forgive your outstanding debt, no matter how sympathetic they may be. People, after all, die every day, and many of them unexpectedly. The mortgage game would be a losing enterprise if such a fate were grounds for debt-forgiveness.

Now that you know you need mortgage insurance, what do you look for? The most obvious factor is cost. Naturally, you must examine the terms of your insurance, since some policies are capped at amounts far less than the balance of your loan, especially if you're in the early years of it. One thing to search for is a policy that offers scaled payments. As you continue to pay off your mortgage, the risk posed to your lender by your death is steadily reduced. Your monthly premiums ought to reflect this.

Your insurance also covers the mortgage company in the event that you can't make your monthly payments. Without insurance, the equity in your home is your collateral. If you default on a payment, your home may be repossessed by the lender. A good insurance policy can give you an extra buffer to help free you from the constant worry of missed or late payments.