PMI-ACP test Questions - PMI Agile Certified Practitioner Updated: 2023

Questions on Malpractice Insurance

A nurse practitioner (NP) writes:

"My collaborative MD believes that I should not need more liability insurance than his rider. My FNP liability insurance costs $1200 -- more than either PNP or ANP. My colleague in the same practice has separate credentials for ANP and PNP but as most of our patients are adult she only carries her insurance for adult -- $800. What do you think about the actual liability needs?"

This question exemplifies the dilemmas NPs are facing when attempting to cover themselves for professional liability. Inherent in this NP's questions are the following questions:

Do I need my own policy, if I am employed and my employer covers me?

• How much malpractice insurance do I need?

• Do I need coverage for all of my areas of certification, even if my practice is limited to one area?

• Why do policies for some areas of certification cost more than others?

• If I don't sign up for the appropriate type of policy, can the insurer refuse to cover me if I am sued?

This article addresses those questions.

The questions that need to be answered to answer this question are:

Will my employer's coverage be enough?

• Is my employer's coverage dependable?

• Do I perform any services that aren't covered by my employer's policy?

• If I leave the employer, will my employer's policy cover me for an incident that occurred while I was still employed?

• If I have 2 policies, will the policy terms allow the insurers to argue about who pays?

Will my employer's coverage be enough? It is difficult to get reliable data to use to predict what settlements, judgments, and defense costs might run. However, according to 2 sources, defense costs are running between $20,000 and $40,000, depending upon whether the claim resulted in a payment.^[1,2] Data from the insurance industry places the average payout for serious injuries as now exceeding $1.5 million.^[3] Another source puts the average payout at just under $200,000.^[2] A third source puts the average at $320,000.^[1]

Average payouts mean little if the verdict or settlement against you is for an amount that exceeds the limits of your policy. Damage awards provide clinicians clues that at least $1 million in malpractice insurance is necessary. Here are some latest cases against NPs. All involve diagnostic errors, which is the most common reason for malpractice lawsuits against NPs and physicians in office practice.

Case 1:
A 15-year-old female, complaining of a severe headache, left school early. Her mother gave her Tylenol and took her to see an NP that evening. The teenager also complained of very stiff joints, aches, and fever. The NP noted a temperature of 103.7 degrees, no cough, no chest congestion, no rhinitis, and no abdominal complaints. A complete blood count showed a white cell count of 16,600. The NP performed tests for meningeal irritation but found none. A pediatrician working in the practice conducted a cursory observation of the patient at the end of the visit. The NP diagnosed probable flu, told the patient's mother to call if the girl vomited or showed other changes in symptoms, and sent the patient home. Later that evening, the mother phoned the office to say her daughter had vomited several times. The NP advised the mother to keep the girl at home for the night, and bring her to the office in the morning. By morning, the girl was lethargic to the point of being only marginally responsive. On her arrival at the clinic, staff called 911. At the hospital, the girl was diagnosed with meningitis, put on antibiotics, intubated, and admitted to intensive care. She continued to deteriorate, endured brain herniation, and died 1 week after the initial visit. The plaintiff's attorney alleged that the NP must have performed improperly the tests to elicit signs of meningeal irritation, as it was certain that the patient had unusual neck stiffness. The NP denied any negligence, arguing that the girl had influenza that quickly progressed overnight into meningitis. The parties settled the case for $500,000.^[4]

Case 2:
A 44-year-old woman whose mother had taken diethylstilbestrol (DES) while pregnant visited a women's health center for evaluation for hormone replacement therapy. An NP performed the evaluation, including a pelvic examination. The patient had some symptoms of pregnancy, but the staff reportedly attributed those symptoms to menopause. The patient said she had been told by doctors at the center that she was incapable of becoming pregnant and did not need to use contraception. The NP did not note an enlarged uterus. Six weeks later, the patient had a CAT scan of the abdomen to rule out tumor. There was no tumor, but there was a 6.5-month fetus. The woman gave birth to a daughter with asymmetrical dwarfism, also known as Russell Silver Syndrome. The child was expected to have to undergo a series of surgeries and use hormonal and physical therapies. The woman sued the women's health center, the larger institution of which the health center was a part, and the NP, who is an expert on DES daughters. The woman argued that her daughter's syndrome was caused by in-utero exposure to hormonal replacement therapy, CAT scans, prescription drugs, and lack of proper prenatal care. The plaintiff argued that the late diagnosis caused her to lose the opportunity to terminate the pregnancy. The parties settled for damages of $1.7 million.^[5]

Case 3:
A 29-year-old female nurse testified that she visited an NP in December 1992 for a physical exam. The NP pointed out a firm lump in the right breast. The NP diagnosed the lump as "fibrocystic breast formation." In April 1994, the patient saw the NP for an unrelated problem. She asked the NP about the breast lump. Later in 1994, the patient saw a coworker NP who examined the breast lump, which had increased in size and had become tender. That NP ordered a biopsy, which was positive for breast cancer with lymph node involvement. In March of 1998, the patient filed lawsuit against the first NP for failure to timely diagnose breast cancer. The NP's side of the story is that in December 1992 she performed a breast test but made no note of a breast complaint or abnormal findings regarding the patient's breast. Had the patient reported a lump or if there was a lump on exam, the NP would have recorded that in the record. In April 1994, the patient did not complain of breast lump, and no breast test was performed. There was no record of a complaint of breast lump or breast exam. In March 1998, the NP defended with the arguments that: (a) the statute of limitations had expired; (b) the patient never complained of a breast lump; and( c) the December 1992 breast test was normal. The patient died in 1999, leaving a husband and 3 children. A judge denied the NP's motion for summary judgment based on expiration of the statute of limitations. After mediation, the parties settled the case for $600,000.^[6]

Successful plaintiffs can enforce judgments or settlements by garnishing wages, putting a lien on the defendant's house, and exercising a levy on the defendant's bank accounts. There are various ways to try to shelter one's income from successful plaintiffs, but they have their own risks and costs.

The ethics of "going bare" (not having insurance) or not having enough insurance weigh heavily on many clinicians. If you make a mistake and someone is injured, are you going to feel ethically responsible for compensating the patient? If you try to get out of this obligation, is it going to weigh heavily on your conscience? If you elect not to purchase insurance or go with a policy with low limits, are you going to worry constantly about having the cash to pay off an injured patient? Will you save money in an account just for that purpose? Are you worried that your employer's policy won't cover you? Or are you unable to get information on your employer's policy? If the answer to any of these questions is "yes," it is probably worth the cost of your own policy to maintain your integrity and have peace of mind.

Every NP is going to encounter different risks and different premiums. Do a risk-benefit analysis. Get as much coverage as you can afford, but no less than $1 million per occurrence. If an employer's policy has limits below $1 million, strongly consider purchasing your own policy for additional coverage.

Is my employer's coverage dependable? An insurance purchaser needs to feel secure that the insurance company is financially secure enough to pay out if necessary. To research the financial stability of an insurance company, find out which company underwrites the policy. This information should be provided on the insurer's Web site. Go to A.M. Best's Web site, or another of the several companies that rate the financial stability of insurance companies, to find the insurer's financial stability rating. You'll want to see a rating of A- or higher.

Do I perform any services that aren't covered by my employer's policy? Each insurer has different terms and conditions. If an NP relies on an employer's policy, the NP will need to be sure he or she can meet the conditions of the policy. Read the policy to determine whether the procedures and services you provide are covered.

If I leave my employer, will my employer's policy cover me for an incident that occurred while I was still employed? Most insurance policies for physician practices are "claims made." With a claims made policy, an NP must purchase a "tail" -- coverage extension -- when the NP leaves the employer. The prices for tails vary greatly and can, for a pediatric NP (PNP), be in excess of $5000. Some employers agree, as part of an employment agreement, to pay for the NP's tail policy. If the employer will not pay for the tail, the NP is going to have to do it when he or she leaves the employer, or the NP will be "bare."

Additional important advantages of having one's own policy are:

1. The NP will have her/his own legal counsel with expenses covered.

2. The NP may be covered for incidents that occur out of the employment setting (depending on the terms of the policy).

3. The NP can purchase limits that may be higher than the employer's.

4. If the NP purchases an occurrence policy, the NP will be covered if he/she leaves the employer's practice, and need not purchase a tail.

The disadvantages of having one's own policy are:

1. The plaintiff may draw the NP into the lawsuit, or attempt to keep the NP in a lawsuit longer than justified, in hopes of drawing on the NP's insurance. However, this may happen whether or not an NP has his or her own policy, as a plaintiff will not know until the "discovery" part of the litigation process whether or not the NP has an individual policy.

2. It is a significant expenditure.

Before electing to go solely with an employer's policy, ask the following questions of the employer:

• Who is the insurer?

• What are the limits?

• What is the company's financial stability rating?

• Am I a named insured? If not, what policy language assures that I will be covered?

• Are there any requirements on NP practice, such as level of supervision, that must be met under the terms of the policy?

• Does the policy state any conditions that I must meet in order to stay covered?

• Is it an occurrence policy or claims made? If claims made, ask: Who will pay the premium for the tail? If the employer refuses to promise to pay the tail premium, ask: How much will the tail cost?

Purchase your own policy if:

• Your employer's policy is claims made, the employer won't pay for the tail policy, and you can't afford to pay for the tail.

• You are not clearly one of the additional insured individuals on the employer's policy.

• You perform NP services outside of your employment.

• Your employer covers you only under certain conditions, and you can't meet all of those conditions.

• The employer's insurance company has a rating lower than A-.

• The employer's policy limits are below $1 million per incident.

If working for a government agency, the considerations are:

• Am I protected under a Tort Claims Act?

• If so, are there are any conditions under which I could be sued as an individual?

If working for a hospital or large organization, the considerations are:

• Does the organization purchase a commercial policy?

• Is the organization self-insured?

• If the organization has a commercial policy, what are the exclusions (ie, what are the circumstances under which I would not have coverage)?

• If the organization self-insures, are there are limits to what the organization would pay in the way of damages, attorney fees, and expert witness fees?

• Are any of my activities as an NP excluded from coverage?

How much coverage should I purchase? Rates vary, based on the company, length of time in practice, type of certification, state where practicing, and number of hours practicing per week. For an employed adult NP working full time in Maryland, latest rates varied as follows:

• $590 a year for a $2 million per incident/$4 million aggregate occurrence policy

• $504 per year for a $1 million/$6 million occurrence policy

• $566 per year for a $1 million/$6 million occurrence policy

• $663.32 per year for a $1 million/$6 million claims made policy

Rates may be lower or higher in other states or for other NP specialties. Purchase as much insurance as you can afford, but not less than $1 million per occurrence.

Why do policies for some areas of certification cost more than others? Premium rates are determined by actuaries who analyze the risk for each category of clinician. If a policy for a family NP (FNP) costs more than a policy for an adult NP (ANP), that means the company's actuaries determined that it is more likely that the payout for an FNP will be more than for an ANP. One reason why the payout might be higher for an FNP would be the extended statute of limitations when the injured party is a child.

Do I need coverage for all of my areas of certification, even if my practice is limited to one area? Maybe. First, if you are an ANP and PNP but practice only with adults, are you committed to never providing services for a child? Second, have you been honest on your insurance application, stating that you are an ANP and PNP but are purchasing only ANP insurance? Third, have you checked with the company to see whether they have any term or condition that would require you to be insured as both ANP and PNP? Insurers may make their own terms and conditions and may deny coverage if their terms and conditions are not met.

If I don't sign up for the appropriate type of policy, can the insurer refuse to cover me if I am sued? Yes.

If I have 2 policies, will the policy terms allow the insurers to argue about who pays? Some policies state that if there is any other insurance policy that applies to the amounts covered under the policy, the other insurance must pay first. In that case, if an NP is insured through an employer as well as his or her own policy, the NP's insurance may be secondary (ie, would pay only if the other insurance has reached its limits). If an employer's policy had a similar condition, the NP might find him or herself involved in litigation about which insurer must pay first. Read and understand each policy's terms regarding other insurance. Ask insurers for terms that will suit your situation.

Multiple choice questions are perhaps the easiest to complete - you simply put a cross in a box - however, the questions often have two answers that could, at first glance, be correct. Don't make the mistake of memorizing the first answer and thinking this is correct without checking all the others.

If it says 'Tick one box', you must tick one box. If you leave it blank or tick two or more boxes you will get zero marks. These multiple choice questions will not start with command words like 'Describe...' or 'Explain...'. They will be written in the form of a question like 'What...?' or 'Why...?'.

There will be more multiple choice questions on the Foundation paper.

These questions have been written by Bitesize consultants as suggestions to the types of questions that may appear in an test paper.

The following questions are representative of the types of questions you will find on the CRCM (Certified Regulatory Compliance Manager) exam.

1.  A borrower has a right to rescind a loan agreement in all of the following situations except:

a. A line of credit used for the borrower's business, secured by the borrower's primary  dwelling
b. A revolving line of credit secured by the borrower's primary dwelling used to Boost the borrower's home
c. An increase of a line of credit from $5,000 to $10,000 secured by the borrower's primary dwelling
d. A loan to pay off a contract for a deed secured by the borrower's primary dwelling

2.  When opening a deposit account online, Regulation E disclosures MUST be provided at the time of account opening or: 

a. Before the first EFT occurs 
b. Along with the first periodic statement 
c. Within three business days of account opening 
d. Within three business days of a customer's request for the EFT service

3.  The primary responsibility for overseeing a bank’s inherent compliance risk should lie with which of the following?

a. Internal audit
b. Consumers
c. Board of Directors
d. Compliance officer

4.   A branch manager finds an unexplained $7,000 cash shortage in Teller #1's cash drawer. Which of the following actions must the bank take?

a. File a Currency Transaction Report (CTR) with the IRS
b. Discharge Teller #1 immediately
c. Send a notice of adverse action to the bank's federal regulator
d. File a Suspicious Activity Report (SAR)

5.  A compliance professional recently discovered the bank did not file and disclose an accurate covered agreement, as required by the CRA Sunshine Act. In order to ensure correct reporting in the future, what must be provided? 

a. All individual mortgage loans 
b. Grants or loans to fulfill CRA activity 
c. Non-public or confidential information that will be provided in the public file 
d. A copy of the agreement to the regulatory agency 24 months after the end of the term

Answer Key

1. a
2. a
3. c
4. d
5. b

An test proctor will begin memorizing test instructions approximately 15 minutes before the test start time. Students must be in the test room with their test at this time. If taking the test on a laptop, it must be booted up and have passed the security check. Hand writers must not have a laptop with them in an test room, unless otherwise allowed according to the professor’s instructions. A student entering the test room after the proctor begins memorizing instructions will not receive additional time for booting up their laptop, passing the security check, and/or memorizing test instructions.

When instructed by the proctor, write your test number on the cover page of your exam, bluebooks, and any scratch paper you turn in as part of your exam. Handwritten test answers must be written in blue books in blue or black ink. Number the bluebooks you use (1 of 1, 1 of 2, 2 of 2, etc.). Proctors will allow time to read the professor’s instructions. Other than counting the number of pages of the exam, students are not permitted to turn the page of an test past the instructions page until the proctor instructs them to do so.

When taking a closed-book exam, no books, outlines, book bags, purses, or scratch paper (other than the scratch paper provided) may be at your seat during the exam. These items must be left outside of the test room or in the front or sides of the test room. Students may not begin to write anything, including on scratch paper, before the proctor begins a closed-book exam.

Students taking in-class exams are prohibited from having any electronic communication device, other than a laptop as allowed per the professor's instructions, during the exam. Cell phones and smart watches must be turned off during the test and placed in a bag or backpack. Violations of this rule may be considered an Honor Code violation. A clock in each test room will be the official timekeeper for the exam.

Non-alcoholic beverages are permitted in test rooms; however, the container must have a lid.

After the test instructions have been read and the test begins, the proctor will remain in the room. Any student who has a question or problem during an test should see the proctor.

Students may use the restroom or take a break during an exam. However, all test materials must be left in the test room and no additional time will be given. Students must sign in and out at the front of the room with the proctor.

We scored companies based on these measurements:

Price (50% of score): We averaged the no-exam life insurance rates for males and females in excellent health at ages 30, 40 and 50 for $500,000 and $1 million and a term length of 20 years.

Maximum face amount for lowest eligible age (10% of score): Companies with higher no-exam life insurance coverage amounts for the lowest age earned more points. Note that maximum no-exam coverage can sometimes become lower if you apply at a higher age.

Age eligible for best length/amount (10% of score): Companies offering no-exam life insurance to folks over age 50 earned extra points.

Accelerated death benefit available (10% of score): This important feature lets you access part of your own death benefit in the event you develop a terminal illness

Option to convert to a permanent life insurance policy (10% of score): This is a good option to have in place if you decide you want a longer policy, especially if your health has declined and you don’t want to shop for new life insurance.

Guaranteed renewals (5% of score): This option lets you extend the coverage after your initial level term period has expired, such as at the end of 10, 20 or 30 years.

Renewal rates can be significantly higher, but renewing can provide extended coverage to someone who may no longer qualify for a new life insurance policy because of health.

Median time from application to approval (5% of score): We gave more points to companies with lower no-exam life insurance approval times.

The timeline for approval could be within seconds or a month, depending on the company and possibly even your health.

Sources: Bestow, Ethos, Fabric, Haven Life,  Ladder, Policygenius and Forbes Advisor research.

© 10'000 Hours/Getty Images How to get rid of private mortgage insurance (PMI)?

If you made a minimal down payment  when buying your home — less than 20 percent of the purchase price, to be precise — you’re probably all too familiar with PMI, or private mortgage insurance. This surcharge, included along with the principal and interest in your monthly mortgage payments, can add hundreds if not thousands of dollars to your housing costs each year. Annoying, especially since these insurance premiums protect your lender, not you, in the event that you default.

That’s the bad news. Now the good news: This extra expense won’t last forever. Each year, your PMI is recalculated using your current loan balance, so the amount you pay will decrease as you pay down the loan.

And once you build up enough home equity, you’ll be able to eliminate PMI entirely. There are several different ways you can go about this, so it’s highly likely you’ll find one that will work for your finances.

6 ways to get rid of PMI

1. Wait until you qualify for automatic or final termination of PMI

A federal housing regulation informally called the “PMI Cancellation Act” assists homeowners trying to get rid of their PMI. The Homeowners Protection Act of 1998 — as it is officially named — confers “automatic” or “final” PMI termination at specific home equity milestones, provided your mortgage is in good standing and you haven’t missed any monthly payments.

The act dictates that your mortgage lender or servicer must automatically terminate PMI when your loan-to-value (LTV) ratio drops to 78 percent — in other words, when your mortgage balance reaches 78 percent of the purchase price of your house.

Alternatively, the servicer must cancel the PMI at the halfway point of your loan’s amortization schedule. For example, if you have a 30-year mortgage, the midpoint would be after 15 years; if you have a 15-year loan, the halfway point is 7.5 years. The PMI must stop even if your mortgage balance hasn’t yet reached 78 percent of the home’s original value. This is known as final termination.

Who this affects: Removing PMI in this way works for folks with conventional mortgages who have paid according to their original payment schedules and have reached the milestones of 22 percent equity or the halfway point in time. In both cases, the loan must be current and the borrower in good standing: no delinquent, skipped or insufficient payments.

2. Request PMI cancellation when mortgage balance reaches 80%

Another way the PMI Cancellation Act benefits you is by granting you the right to remove PMI once you have paid off enough of your mortgage principal to reach 20 percent home equity; that is, once your loan balance reaches 80 percent of the home’s original value.

Who this affects: If you’re making payments as scheduled, you can find the date that you’ll get to 80 percent on your PMI disclosure form (or you can request it from your servicer). However, you need to be proactive.

You must do the following to cancel PMI:

• Make the PMI cancellation request to your lender or servicer in writing.
• Be current on your mortgage payments, with a good payment history.
• Meet other lender requirements, such as having no other liens on the home (i.e., a second mortgage).
• If required, you might need to get a home appraisal. If your home’s value has declined, that would mean you have yet to reach that 20 percent equity and might not be able to cancel PMI.

3. Pay down your mortgage earlier

If you have the cash to spare, put it towards extra or bigger mortgage payments — to help you hit that golden 20 percent equity figure faster.

You can prepay the principal on your loan, reducing the balance — which also helps you save on interest payments. Even $50 a month can mean a dramatic drop in your loan balance and total interest paid over the term of the loan.

To estimate the amount your mortgage balance needs to reach to be eligible for PMI cancellation, multiply your original home purchase price by 0.80.

Who this affects: Homeowners can use this method to achieve 20 percent equity more quickly. You can do so by making bigger mortgage payments, more frequent payments or by putting a lump sum towards paying down the loan. You should check with your lender as to which methods are preferable.

4. Refinance your mortgage

When mortgage rates are low, homeowners are often advised to consider refinancing. Especially in the last few years, when rates were at a historic trough of 3 percent, refinancing meant lower monthly payments and reduced interest costs. And the rise in home prices often meant a new loan could easily be below 80 percent of the home value, enabling you to eliminate PMI.

While the latest sharp climb in interest rates means it might not now be worth the effort and expense of  refinancing just to get rid of PMI, it’s still something to keep in mind if you are close to the 20-percent-equity mark. If you determine that refinancing puts you over that threshold, contact your lender after the process is complete and request cancellation of your PMI.

You can also refinance into a loan that doesn’t require PMI. One way to do this is by “piggybacking” — that is, taking out a home equity loan, line of credit or other mortgage, in addition to the new primary one; this additional loan finances your down payment, getting it to the 20 percent mark.

Another option is refinancing with a government-backed USDA or VA loan, which doesn’t carry PMI, although they do charge their own fees and have some eligibility restrictions.

Refinancing works best if your home has gained substantial value since the last time you got a mortgage. For example, if you bought your house four years ago with a 10 percent down payment, and the home’s value has risen 25 percent since then, you now owe 65 percent of what the home is worth, which is less than the 80 percent threshold for PMI. Under these circumstances, you could refinance into a new loan and no longer have to pay for PMI.

With any refinancing, you’ll want to weigh the closing costs of the transaction against your potential savings from the new loan terms — especially considering the higher cost of borrowing today — and eliminating PMI.

Who this affects: This strategy works well in neighborhoods where home values have increased significantly in latest years. If your home value has declined, refinancing could have the opposite effect — you might be required to add PMI if your home equity has dropped.

Refinancing to get rid of PMI typically doesn’t work well for new homeowners. Many loans have a “seasoning requirement” that requires you to wait at least two years before you can refinance to get rid of PMI. So if your loan is less than two years old, you can ask for a PMI-canceling refi, but you’re not guaranteed to get approval. In addition, mortgages hit some of their lowest interest rates in decades two years ago, so homeowners who locked in those low rates might be financially better served by paying PMI until they reach the 20 percent equity threshold.

5. Reappraise your home

In a hot real estate market, your home equity could reach 20 percent ahead of the loan payment schedule. In this case, it might be worth paying for a new appraisal. If you’ve owned the home for at least five years, and your loan balance is no more than 80 percent of the new valuation, you can ask for PMI to be canceled. If you’ve owned the home for at least two years, your remaining mortgage balance must be no greater than 75 percent.

Appraisals for a single-family home have risen in latest years. As of early 2023, you can expect to pay between $500 and $700, depending on your area. Some lenders might be willing to accept a broker price opinion instead, which can be a substantially cheaper option than a professional appraisal. On the flip side, professional appraisals are highly regulated and provide an unbiased assessment.

Who this affects: Median home values have shot up by around 30 percent nationwide over the past couple of years, and borrowers who live in areas that are particularly red-hot might have seen their home values jump even higher. In fact, the value might have increased enough to bump you out of the PMI range. If this is the case, it’s time to talk with your lender about getting a new appraisal and potentially canceling your PMI requirement.

6. Expand or renovate your home to increase its value

While it wouldn’t make financial sense to add onto your home just to get out of paying PMI, investments you make in your home can be a path towards ditching it. If you’ve added amenities or modernized, that might have increased the value, which could also mean more equity. Improvements like a renovated kitchen, new garage doors or windows or an extra bathroom, like these can increase your home’s value (as reflected in a new appraisal) and help you cross the 20 percent equity finish line in the process.

Who this affects: If you are close to having 20 percent equity and being eligible for PMI cancellation, making significant improvements to your home could raise the home’s value enough to meet that threshold if you pay to have your home reappraised after the work is completed.

Your PMI rights under federal law

If you pay for PMI, you should be aware of the rights conferred to you by the Homeowners Protection Act. In addition to providing the mortgage payoff benchmarks to get rid of PMI, the PMI Cancellation Act also protects you against excessive PMI charges. You have the right to get rid of PMI once you’ve built up the required amount of equity in your home.

Lenders have different rules for canceling PMI, but they are required by law to provide you with a mechanism to do so. Prior to the Homeowner Protection Act’s passage, a homeowner would have little recourse if their lender refused to release them from paying PMI, even if they had enough equity in their home that the lender would be made whole if the homeowner defaulted and the lender foreclosed and seized the home.

Before you sign a mortgage with PMI, ask for a clear explanation of the PMI rules and schedule. This will enable you to accurately track your progress toward ending the PMI payment. If you feel your lender is not following the rules for eliminating PMI, you can file a complaint with the Consumer Financial Protection Bureau.

Remember: You might be able to eliminate PMI when your home value rises or when you refinance the mortgage with at least 20 percent equity. But the onus is on you to request it.

Don’t drain your bank accounts to escape PMI

When it comes to how to get rid of PMI, you don’t need to be overzealous. While paying PMI each month — or as a lump sum each year — is no financial joyride, be careful not to make your finances worse by hustling to get rid of PMI.

Most financial experts agree that having some liquidity, in case of emergencies, is a smart financial move. So before you tap your savings or retirement funds to reach that 20 percent equity mark, speak with a financial adviser to make sure you’re on the right track. In particular, if you bought or refinanced your home within the past few years, you probably have a favorable interest rate. Even with the added hassle of paying for PMI, pulling your money out of high-yielding or appreciating investments to pay off a low-cost mortgage might not make financial sense.

“There seems to be a philosophical aversion to PMI on the part of many buyers that is misplaced,” says Bankrate chief financial analyst Greg McBride. “As long as you’re not taking an FHA loan, you’re not married to the PMI. You can drop it once you achieve a 20 percent equity cushion, which may only be a few years away depending on home price appreciation. But do not feel the need to use every last nickel of cash to make a down payment that avoids PMI, only to leave yourself with little in the way of financial flexibility afterwards.”

FAQs about PMI

• How much does PMI cost?

  Caret Down

  According to Freddie Mac, the average PMI payment ranges from $30 to $70 per month for every $100,000 you borrow.

  For example, if you get a$400,000 mortgage, you can expect to pay between $120 and $280 per month.

• What are the benefits of getting PMI?

  Caret Down

  Private mortgage insurance protects your lender, not you, in the event of a default. The main benefit of PMI is that it lets you make a smaller down payment, which in a pricey housing market can let you buy a home sooner than if you decided to wait until you could afford a 20 percent down payment.