What’s Mortgage Life Insurance?

Mortgage life insurance can help ensure your family has a roof over their heads — but there are drawbacks.

Written by Devon Delfino / May 25, 2022

Quick Bites

  • Mortgage life insurance pays a death benefit in the form of paying off your mortgage.
  • That means your loved ones will not get a payout upon your death.
  • There are limitations to mortgage life insurance compared to regular term life insurance.

Buying a home with a mortgage is a big, anxiety-filled deal. It might be the biggest chunk of money you ever lay out at one time. But what if you’re the primary breadwinner of the family and you die during the term of the mortgage? What happens to your family? How will they be able to pay off that loan?

Life insurance can help quell those anxieties. And, for homeowners, there is an option just for mortgages known as mortgage life insurance. But you should be aware that it’s not a perfect product. Here’s what you should know about mortgage life insurance, including how it works, how much it generally costs and when it can be useful.

What is mortgage life insurance?

“Mortgage life is intended to protect the lender in case the borrower dies and can't repay the mortgage. The mortgage lender will be the beneficiary,” explains David C. Marlett, managing director at the Brantley Risk and Insurance Center at Appalachian State University.

Mortgage life insurance (also called mortgage protection insurance, or MPI) is a type of term insurance (fixed in how long it lasts) and it ends when your mortgage is paid off. You would make a set monthly premium payment during that time to keep the policy in force. If you die during the term of the mortgage and MPI, your death benefit goes to paying off your mortgage, and your family gets no pay out.[1]

Another thing to note is that some MPI policies will offer limited coverage if you lose your job or become disabled after an accident, but read the fine print carefully, because some policies will not cover you in those cases.[2] The policy may only pay out the death benefit to your lender if you die because of an accident.[3] This makes MPI policies limited compared to other types of insurance.

Again, either read closely, or consult a Certified Financial Planner.

How much does mortgage life insurance cost?

The cost of mortgage life insurance will depend on the insurer. Generally, mortgage life insurance doesn’t require a medical exam — but that means that it’s probably going to be more expensive than a regular term life policy that requires a medical exam.[3] That’s because the less they know about your individual circumstances, the more risk the insurer assumes of applicants.

Haven Life provides examples of quotes for a $500,000 term life insurance policy for people in excellent health:[3]

GenderAgeTerm (mortgage) lengthPremium
30Male30$29.99
30Female30$25.40
35Male20$20.72
35Female20$17.50
40Male15$20.07
40Female15$19.67

When does mortgage life insurance make sense?

In general, although mortgage life insurance can help homeowners ensure that their home is protected, MPI may not be the best option.

“Mortgage life insurance has significant limitations…Traditional term insurance offers far more flexibility and gives the control to the policy owner,” says Marlett. “I would recommend buying traditional term insurance instead of mortgage life.”

If you are interested in getting mortgage life insurance, you should know that you may be required to purchase it within 24 months of purchasing your home. And if you’re an older homeowner, you may be denied coverage based on your age.[2]

All that aside, if you meet the requirements, and otherwise find life insurance difficult to qualify for at a reasonable price, MPI may be a useful thing to have in your financial toolkit. You can find mortgage life insurance through mortgage lenders as well as private insurance companies.[2]

It can help to talk to a financial professional, like a Certified Financial Planner, to see if an MPI policy is right for you, or what options might work better for your circumstances.

Article Sources
  1. Nationwide. “Mortgage protection insurance: use term life insurance to pay off a mortgage.” https://www.nationwide.com/lc/resources/investing-and-retirement/articles/mortgage-protection.
  2. Rocket Mortgage. “Mortgage Protection Insurance Explained: Does Every Homeowner Need It?” https://www.rocketmortgage.com/learn/mortgage-protection-insurance.
  3. HavenLife. “Using life insurance to help protect your mortgage.” https://havenlife.com/blog/mortgage-life-insurance/.

About the Author

Devon Delfino

Devon Delfino

Devon Delfino is a writer who’s covered personal finance—including everything from student loans to budgeting to saving for retirement and beyond—for the past six years. Her financial reporting has appeared in publications like the L.A. Times, U.S. News and World Report, Teen Vogue, Masha

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