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Mortgage Protection Insurance Explained

mortgage protection insurance
Insurance Quotes 2 Day Team

Written By Doug Mitchell

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA.  Doug has spent close to 30 years in the insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health.  Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

Holly Mitchell  &

Holly Mitchell’s background in life insurance insurance goes back to 1985 when she worked for her father who was a New York Life agent. Holly has a marketing degree from Auburn University and has had a life insurance license since 2008. In addition to advising life insurance for customers all around the country, Holly is our website fact checker.

Rob Pinner   &

Rob Pinner is the founder and CEO of Pinner Financial Services servicing all 50 states. Rob started his insurance career in 2002.

Louis LaBash

Results-driven and innovative life insurance professional with 30 plus years of life insurance industry sales and marketing experience. Recognized as a pioneer in the field, leveraging phone and internet channels to exceed personal sales of over $100 million during the first decade of the 21st century. Creator of a highly effective intuitive IUL life insurance sales software that facilitated the sale of millions of dollars of indexed universal policies by numerous life insurance agents. Proven track record as a Managing General Agent (MGA), Life Agent, IUL Life Insurance Sales Software developer, and leading-edge creator of insurance marketing tools, educational content, and delivery systems.

 11 minute read

If you have recently closed on a home loan, you’ve likely received several notices about mortgage protection insurance.

Did you read them or throw them away?  If you opened all of those letters, you saw that they were all basically the same. They are an attempt to scare you into mailing back your information to buy mortgage protection insurance. Slow down for a minute and use the life insurance calculator on this page to get an instant rate.

You can save a lot of time and high sales pressure from an insurance agent coming to your house to convince you to buy a life insurance policy.

To be clear, mortgage protection insurance is simply life insurance.  Name your beneficiary, and they will choose what to do with the life insurance proceeds when you die.  Hopefully, they will pay off the mortgage if that is your wish. You can have this peace of mind with Mortgage Protection Insurance.

Does this Mortgage Protection Insurance Letter Look Familiar?

Mortgage Protection Insurance

What is Mortgage Protection Insurance?

Simply put, Mortgage Protection Insurance pays off your mortgage if you die during the policy term. It is term life insurance designed to pay off your mortgage so that you can leave your surviving loved ones a paid-for home.

Mortgage protection is a straightforward concept. 

Mortgage Protection Insurance is not a “type” of life insurance but rather a “Purpose” for a life insurance policy. In almost every case, term life insurance is the foundation for a Mortgage Protection Plan. Since term insurance is the cheapest life insurance available and can be purchased with a policy period of up to 40 years, it is the perfect life insurance product for Mortgage Protection Insurance.  

Mortgage Protection Insurance protects your mortgage by insuring your life, your spouse’s life, or both for the amount of the mortgage and for the length of the mortgage. This way, if a covered breadwinner dies unexpectedly during the term of the policy (which should match the term of the mortgage), the beneficiary can pay off the mortgage, and the family can continue to live in the paid-for home.

What Mortgage Protection Insurance Will Not Do For You.

Mortgage Protection Insurance is not like a homeowner’s policy. It will not pay to repair or replace your home, and the policy does not provide liability if you are sued by someone who gets hurt on or on your property.

Mortgage protection insurance is not the same as Private Mortgage Insurance (PMI), which you may be required to purchase if your down payment on your home is insufficient. PMI does not protect you or your family; it only protects your lender if you default on your mortgage loan. Usually, a home buyer must purchase PMI if their down payment on the home is less than 20% of the purchase price.


I already have Life Insurance through my Job.

term life insurance

Having a group term insurance policy through your employer is a wonderful benefit because there is no medical underwriting, and the employer typically pays all or a portion of the premium. Your employer-sponsored life insurance should be used as a supplement to your individual life insurance program.  There are some inherent issues with this type of coverage:

  • Group life insurance is not portable. If you leave your job or are terminated, you cannot take your life insurance with you.
  • The coverage limits on group life insurance are typically a multiple of your annual salary (2 or 3 times). This means if you earn $100,000 per year, your death benefit will only be $200,000 or $300,000, typically falling short of paying off your mortgage and providing additional funds that your surviving loved ones will need to continue financially.
  • If your spouse is also a breadwinner and his or her income is needed to pay the mortgage, the spouse typically cannot get covered for the same amount on the group policy and will, therefore, need an individual life insurance policy.

I’m Already Covered under an Individual Life Policy

If you currently have life insurance but didn’t own a home when you purchased it, your death benefit is likely not enough to cover all your insurance needs plus paying off your mortgage. Most experienced life insurance agents will always recommend that you purchase enough life insurance to provide replacement income for the following:

  1. Pay monthly living expenses for your surviving loved ones for a period of three years or more.
  2. Provide the funds needed to help with the cost of college education for your children.
  3. Provide the funds needed to pay into a retirement plan for your spouse.
  4. Pay off debts like credit cards, personal loans, and vehicle loans
  5. Pay off your mortgage

If you didn’t have a mortgage when you purchased your life insurance, it’s unlikely that the debt was considered when your agent completed your insurance needs analysis.

Isn’t Mortgage Protection Insurance just Term Insurance?

Yes. As we mentioned earlier, mortgage protection is a purpose for life insurance. The best type of insurance to use is term life insurance because it is the most affordable type of insurance and has policy periods that match up with the length of your mortgage.

When mortgage insurance was first introduced, most insurance carriers used “decreasing term” insurance because the death benefit would decrease as your mortgage balance went down. Even though you ended up with little or no insurance at the end of the term, the rates did not go down as the coverage did, and the monthly premiums were not that much lower than a level-term policy.

Today, we primarily use level-term insurance because it accommodates the insured. If they sell one home and buy another, they can use the same insurance policy because it covers the person and not the home. Plus, if the insured dies, the beneficiary can use the death benefit for anything they wish. For example, your surviving spouse may decide to sell the home and move into a condo and spend the death benefit on paying off other things or starting a business.

If you prefer to assign your policy to your lender, you can do that, but make sure the assignment has the clause “at their interest may appear.” That way, the lender must return the unearned portion of the death benefit to the beneficiary on your policy.

Riders you can add to Mortgage Protection Insurance

Insurance riders are optional coverages that you can add to a life insurance policy to broaden your coverage and get living benefits. It is the best way to customize your policy to meet your individual needs and the needs of your family.

Disability Insurance Rider

Adults aged 50 or younger have a greater chance of becoming disabled and unable to work than dying unexpectedly.


Many insurers that offer Mortgage Protection Insurance also offer a disability rider to pay a monthly sum to policyholders who become disabled. The amount of your monthly benefit and the duration of payments will depend on the insurance company you select.

Critical Illness/Chronic Illness Rider

These riders allow the insurance company to make a lump-sum payment if you are diagnosed with a covered illness.

Return of Premium Rider

The return of premium rider is very popular for young families who are typically concerned about outliving their insurance company and then having nothing to show for it. When you add the Return of Premium (ROP) rider to your Mortgage Protection Insurance, the insurance company is obligated to return the entire premium you’ve paid on your policy if you are alive when the policy expires.

Your big fat return of premium check is tax-free, and you can spend it however you wish!

Other Insured Term Rider

This optional rider allows the applicant to add a spouse to the policy with term insurance coverage up to the limit for the primary insured.

Children’s Term Rider

The children’s term rider allows the primary insured to provide term insurance coverage for all dependent children in the household and children that are born or adopted by the insured after the policy has been issued. Eligible children must be unmarried and age 15 days through 18-years old. Coverage terminates at age 25.

Mortgage Protection Insurance Unemployment Benefit Rider

This rider is triggered if you become unemployed through no fault of your own. If you are laid off, or your employer closes its doors, your mortgage protection insurance unemployment benefit will kick in and help you get through the financial emergency.


How do I find the best rates on Mortgage Protection Insurance?

We know that 20 years ago, you would be on the phone most of the day to find the best rates for Mortgage Protection Insurance. Now, the internet will cut your shopping from all day to about 1 hour or less. 

You can easily start the process with the life insurance calculator on the side of this page.  Enter your info and click submit, and you see the best prices from about two dozen insurance companies. This will typically not be your final rate, but it will provide a very good indication of what you’ll be paying for life insurance. You must provide additional information to determine your final mortgage protection insurance cost.

You can then contact the agent and complete the application over the phone, and get a final rate for you to consider. If all goes well (and it usually does), you could easily have your policy in place in a week or two, not a month or two.

What Companies are Best for Mortgage Protection Insurance?

You will quickly discover that there are many mortgage protection insurance companies because any life insurance company that offers Term Life Insurance can be used to set up a Mortgage Protection Insurance plan. Still, there is a subset of those companies that offer the important riders that should be considered part of your plan. Remember, these option riders allow you to broaden your protection and access living benefits. They allow you to customize your mortgage protection life insurance to meet your needs and budget.


AIG Review


AIG American General

AIG’s American General Life Insurance is one of the largest insurers worldwide and currently serves over 13 million policyholders. While they have been in business for over 160 years, they have proven to be an excellent choice for any life insurance and are rated very high by AM Best.

American General has very competitive rates for term life insurance that would form the foundation for your Mortgage Protection insurance.


Assurity Life Insurance Company Review


Assurity Life

Assurity Life is another highly-rated and well-known life insurer that offers Mortgage Protection Insurance. They specialize in offering competitive MortgageProtection insurance with many available riders to customize your policy to meet your needs.



Foresters Life Insurance


Foresters Life Insurance Company

Foresters Life Insurance Company is a fraternal benefit company that focuses on helping its members with everyday financial challenges. The Foresters Term Product is an excellent way to purchase Mortgage Protection Insurance with terms of 10, 20, or 30 years with guaranteed rates. Foresters offers a fully underwritten and non-medical term product.


mutual of omaha


Mutual of Omaha | United of Omaha

Mutual of Omaha is one of the most recognized names in Life Insurance in America. The Term Life Express product offers significant protection for you to leave the funds needed to satisfy your mortgage in the event of your death. They also offer many bells and whistles (riders) to broaden your coverage and get additional living benefits.


Protective Life logo


Protective Life

Protective Life is another highly-rated life insurer with roots planted over 100 years ago. They are a value-driven company that offers a complete portfolio of life insurance products and is very competitive in the marketplace. Protective offers term life insurance starting at about $7.00 a month, which leaves a lot of room in your budget to add valuable riders like critical illness and disability income.


North American Company logo

North American 

With A+ ratings at A.M. Best, S&P, and Fitch rating services, North American offers Mortgage Protection with face amounts up to $2,000,000 with no medical exam requirement. Their pricing is highly competitive, and, in many cases, can get your policy approved and ready to issue within a day.  


Lincoln Review


Lincoln National

Lincoln National is a highly-rated life insurer that offers a complete portfolio of insurance and financial products. They are currently ranked #205 on the Fortune 500 list of companies for revenue and ranked 24th for the value of assets.

Lincoln offers TermAccel with up to a $2.5 million death benefit with no medical exam requirement through their accelerated underwriting program.  Their LifeElements term policy allows you to purchase face amounts of more than $1 million if you are 30 to 54 years old. Qualified applicants can purchase coverage with no lab work.


transamerica logo



Transamerica is a very well-known company in the American insurance marketplace. Their iconic Pyramid-shaped building on the San Francisco skyline is a testament to the company’s size in the insurance industry. Transamerica’s term products are a perfect fit for creating a well-rounded Mortgage Insurance Plan because of their competitive pricing, various riders, and outstanding customer service.


How Much Does Mortgage Protection Insurance Cost?


Like any other life insurance product, Mortgage Protection Insurance rates are primarily based on your age, health and the policy death benefit (face amount). Although the insurers we’ve listed above provide very similar policies, the rates differ for each company depending on the insurance costs and operation costs.

These rates are based on a healthy, non-smoking male with a $300,000 30-year mortgage:

Applicant Age $300,000 Coverage *Disability Income $1,000 **Accelerated Death Benefit Total Monthly Premium
30 $24.36 $11.80 Included $36.16
35 $29.32 $14.85 Included $44.17
40 $43.94 $20.60 Included $64.54
45 $67.16 $30.38 Included $97.54
50 $111.01 $40.72 Included $151.73

*The disability income benefit rider provides for the insurer to pay the named insured a monthly benefit of $1.000 after the waiting period if the insured becomes totally disabled before the insured turns 65 years old.

** The Accelerated Death Benefit provides for the insurer to pay the named insured an accelerated portion of the death benefit up to $250,000 if the insured becomes terminally ill or is expected to live in a nursing facility until death. The remaining face amount must be at least $10,000.

Most insurance companies offer several other riders.  These riders will likely meet the applicant’s needs and fit within his or her budget as well. These additional option riders allow the policyholder to broaden their coverage and add living benefits to their Mortgage Protection Plan. 


Who Should Consider Mortgage Protection Insurance?

  • All new homeowners
  • Any homeowner that has life insurance only through their workplace
  • Any homeowner that has individual life insurance but did not consider the amount of their mortgage when they calculated their life insurance needs.
  • Any homeowner wanting to make certain that their mortgage is paid if the pass away or who is concerned about their ability to make their mortgage payment if they become disabled.


Who Might Pass on Mortgage Protection Insurance?

  • People who have a paid-for home
  • People who are renting and not buying a home
  • Anyone who has enough life insurance to meet the financial needs of their surviving loved ones and pay for their outstanding mortgage.
  • Single people without children and no surviving loved ones who would need to continue living in their home.


The Bottom Line on Mortgage Protection

Life insurance is not for everybody. In fact, about 40% of adults in America do not carry life insurance. These are the risk-takers in the world who may have the resources to replace what a life insurance policy provides.

But, if you are a homeowner or first-time buyer with a mortgage payment and want to mitigate the financial risk of dying unexpectedly, we will be happy to filter through all of the carriers we represent to discover the best mortgage protection insurance company to accommodate your circumstances and budget.

The peace of mind you will get knowing that your surviving loved ones can continue to live in a paid-for home is well worth the moderate cost of mortgage protection insurance. You will soon discover that mortgage protection insurance rates vary from company to company. Start by using the life insurance calculator on this page to see your rate.


Frequently Asked Questions about Mortgage Protection Insurance (MPI)

Who does MPI cover?

MPI covers the insured person or persons, not the home or the lender.

What does MPI cover?

MPI covers the life of the insured in the event they die during the policy period.

How much MPI do I need?

The coverage amount equals the mortgage balance.

Who gets the death benefit?

The benefit is paid to the designated beneficiary or contingent beneficiary.

Will my insurance payment decrease as my mortgage balance goes down?

With a level-term MPI policy, neither the death benefit nor the periodic payment decreases.

author avatar
Doug Mitchell, CLU Independant Advisor
Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA. Doug has spent almost 30 years in the life insurance industry and has also held licenses to sell securities, long-term care insurance and home and auto insurance. Doug is a Top of the Table Million Dollar Round Table member (MDRT).  MDRT is a global, independent association of the world's leading life insurance advisors.  For two years, Doug served as President of the Auburn Opelika Association of Financial Advisors and has been a member of the Million Dollar Round Table. He obtained Life Millionaire status at Horace Mann Insurance Company and was awarded the Life Agent of the Year Award. Later in his career with New York Life he was an Executive Council Member. Doug currently serves as President of Ogletree Financial, a managing general agency serving life insurance agents and clients in all parts of the United States. Today, Doug’s main focus is servicing 1000s of policyholders and growing the agency through the reach of