What Is Mortgage Protection Insurance?

What Is Mortgage Protection Insurance?


Buying a home is a major financial commitment. Depending on the loan you choose, you might be committing yourself to 30 years of payments. But what will happen to your home if you suddenly die or become too disabled to work?

Mortgage protection insurance (MPI) can help your family cover your mortgage – you can avoid foreclosure if you can no longer work to pay your mortgage due to terminal illness or disability.


What's Good About Protecting Your Mortgage?


  • Plenty of flexibility. Your family can decide how to use the proceeds. They can use it to pay off the mortgage — or for something else like replacing lost income, investing it for retirement, paying tuition or covering pressing costs like burial expenses.
  • Mortgage Protection Insurance can be very affordable — and probably costs less than you think. In fact, 85% of consumers overestimate its cost.
  • Coverage never decreases. The coverage amount you select when you apply will remain the same throughout the entire term of coverage.
  • Price never increases. The price is guaranteed to remain the same for the length of the coverage period.
  • Extra protection. Some policies offer “living benefits” in addition to a death benefit, allowing you to access the death benefit early under certain circumstances (like terminal illness).
  • You can get the option of Return Of Premiums. If the policy is not utilized by the end of the term period you can receive up to 100% of the premiums you paid into the policy.

Mortgage Protection Insurance(MPI) vs. Private Mortgage Insurance(PMI)/FHA Mortgage Insurance


Keep in mind that there are different types of mortgage insurance and MPI isn’t the same thing as private mortgage insurance. PMI is a type of protection that safeguards the owners of your home loan if you stop paying on your mortgage loan. Many homeowners assume that their PMI will cover their mortgage payments when they die. This assumption is incorrect. As the borrower, PMI doesn’t afford you any type of protection. If you can’t pay your mortgage and you have PMI, your home will still likely go into foreclosure. You will typically be required to pay for PMI if you take out a conventional loan with a down payment of less than 20%. You can only cancel your PMI when your equity reaches 20%.

When you take an FHA loan, you must pay both an upfront mortgage insurance premium and a monthly premium. Like PMI, FHA insurance payments protect the lender against default on mortgages. However, FHA mortgage insurance affords you no protection as the homeowner.


Since you never know when the unthinkable will happen, mortgage protection from Family For Life Insurance uses a combination of life insurance products to make sure your loved ones will always have enough cash on hand to keep up with the payments or retire the mortgage.

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