Job-Loss Insurance. Lose your job and get your Mortgage paid for.

Some homebuilders, lenders and agencies offer insurance that will pay your mortgage for up to 6 months if you become unemployed.

Job-loss mortgage insurance -- which pays all or part of your mortgage payment if you lose your job -- can bring peace of mind to homeowners and would-be homebuyers alike.

And it's often available at no cost to homebuyers.

With the unemployment rate hovering around 10%, the highest in more than 25 years, it's not surprising people are hesitant to buy homes even in a low-rate, low-price market. And many current homeowners no doubt lose sleep worrying how they'll keep roofs over their heads if they join the ranks of the unemployed.

Once hard to find, job-loss mortgage insurance is now available not only from traditional insurers but from homebuilders, banks and other lenders, real-estate agencies, realty groups, and state and local housing agencies.

"The only reason people may not be buying (homes) now is fear of losing their jobs," says George Akers, the executive vice president of First Mortgage, whose mortgage customers get the company's Worry-Free Mortgage Protectionprogram free.

In Akers' experience, mortgage protection plans have become increasingly common in the past year or so.

Policies vary

As with any insurance product, policies vary. For example:

• The California Association of Realtors' Mortgage Protection Program is free for first-time homebuyers, who can get up to $1,500 a month for six months to help make their mortgage payments. The Realtors' Housing Affordability Fund has committed $1 million to the program.

• Genworth Financial's Job Loss Protection is available at no charge to buyers purchasing Genworth mortgage insurance. It covers PITI -- principal, interest, taxes and insurance -- up to a certain amount, also up to six months.

• Prudential Georgia Realty's Mortgage Protection Program is funded by the seller at closing for $500. One of many throughout the country affiliated with the Rainy Day Foundation's Homeowner Education and Loan Protection service, the program covers the lesser of the PITI or $1,800 a month, up to a maximum of six payments during the two-year coverage term.

"Job-loss protection plans in real estate are gaining in momentum," says Dan Forsman, the president and CEO of Prudential Georgia Realty, which began offering the program this year. "It's a bit early to quantify at this point, but I can tell you our 1,200 agents love having this as an option."

Forsman says it can differentiate a house from similar ones in the same market, especially in a market in which the greatest activity is in homes that have a lower price. Buyers of these homes -- often first-time buyers -- tend to gravitate toward the peace of mind offered by these plans the most, he adds.

In the fine print

As with any insurance plan or legal document, read carefully before you sign. Common provisions in the fine print include:

• Coverage level. "Consumers may believe the policy will cover the full mortgage payment or even other consumer debts," says Michael T. McRaith, Illinois' insurance commissioner. McRaith says many of these policies "only cover the minimum payment required to keep the mortgage from foreclosure."

• Effective date. Policies often delay the date they become effective by a month or more to eliminate people who sign up for the plan when they know their jobs are in imminent jeopardy.

• Payment date. Don't assume your mortgage payment will go out the day after you lose your job. In fact, the check goes out to the mortgage company 30 to 60 days after the job loss.

Will it work for you?

Who are these plans best suited for? "Anyone in a company or career field that is not rock-solid in this economy," Forsman says, adding that recent college graduates may also be looking for some insurance assurance.

Many people are excluded from taking advantage of these plans, typically those who are:

• Self-employed.

• Already unemployed.

• Under age 18 or over age 60.

• Retired.

• In active military service.

Moreover, the job loss must be "involuntary." The definition of "involuntary unemployment" is narrow. It does not include quitting, resigning, retiring, expiration of an employment contract, being fired for cause or being on leave due to accident, sickness, disability, family obligations, childbirth, pregnancy, or scheduled seasonal or temporary breaks. If you're a union worker, find out -- before you sign up -- whether you'd be covered while on strike.

Some plans are only for first-time buyers (there's the likely assumption that this group is least likely to have an emergency fund after forking over a down payment) and must be handled at the closing. Some plans are available to current homeowners. Some are renewable; others aren't.

One more thing: Any payments made on your behalf to the mortgage company may be considered taxable unemployment benefits.

"Evaluate carefully whether the investment is well-spent," McRaith says. Could the premium paid be better spent or saved elsewhere? "As the decision is made, the consumer should ensure that his or her unique financial and life circumstances are properly considered."

This article was reported by Melissa Ezarik for Bankrate.com.