If you have a mortgage on your home and your family is depending on you to make the payments, you may want to purchase mortgage protection insurance. This is a type of life insurance specifically designed to pay off your mortgage in the event of your death, so your family can remain in the home. Some mortgage protection insurance policies also provide benefits in the event you become seriously ill or disabled.
How Does Mortgage Protection Insurance Work?
Mortgage protection insurance (MPI) is a type of term life insurance. You purchase a policy for a set period of time (usually the length of the mortgage) and pay monthly premiums. If you die during the term of the policy, the death benefits are paid directly to your lender to pay off your mortgage. MPI coverage is also available that pays benefits if you become disabled and are no longer able to pay your mortgage. In that case, the insurance company would make your mortgage payments for you. The policy may not cover property taxes and homeowner’s insurance that your lender maintains in escrow.
How Much Does Mortgage Protection Insurance Cost?
For many people, mortgage protection is one of the most affordable types of insurance. Many insurers do not require you to have a medical exam to qualify. Premiums are based on several factors, including:
- Amount of coverage (size of your mortgage)
- Age
- Health
- Tobacco use