If you have a mortgage, there’s a good chance you’ve heard of mortgage protection life insurance (often referred to as MPI). 

But if you’re like most new homeowners, you don’t know what this is or if it’s something worth your money. 

mortgage protection insurance

In this article, we’ll take a look at the features of a mortgage protection insurance policy to help you determine if one of these policies might be right for you.

In This Article

What Is Mortgage Protection Insurance?

Mortgage protection insurance is a type of life insurance. It’s sold to homeowners by banks and insurance companies who have an affiliation with mortgage lenders.

Its name well describes its purpose —to protect the loved ones you leave behind by taking out a life insurance policy specifically intended to cover your mortgage payments.

You’ll find that these policies work much the same way as any other type of life insurance.

You select a mortgage protection insurance policy and pay monthly premiums over the term (or life) of the policy.

If you pass away during the term of your policy, the policy pays out. If you outlive the term of the policy, it ends. 


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What’s Good About Mortgage Protection Insurance?

Let’s take a look at some of the major pros of an MPI policy.

  • Mortgage protection: Your mortgage is likely your biggest debt, and it’s a debt your family will need to take on if you pass away before you’ve paid it off. An MPI policy is a way to protect and provide for your loved ones after you’re gone. 

  • Simple qualifications: You won’t need to undergo a physical or answer any in-depth health questions to qualify for a mortgage protection insurance policy. It’s a simple way for people who don’t qualify for other types of life insurance to get a policy.

  • Returned premiums: If you don’t file a claim and have finished paying off your mortgage, some insurance policies will return your premiums to you through an optional rider. That’s valuable cash, back in your pocket for other uses. 

  • Solid supplement: An MPI policy is a nice supplement to your regular term life insurance policy if it’s affordable. If you were to pass away, your MPI benefit would pay off your mortgage, while the benefit from your term life policy would support your family and pay off your other debts

What’s Bad About Mortgage Protection Insurance?

While there are some good aspects to MPI policies, there are also some drawbacks to MPI you’ll need to keep in mind. 

  • Benefit payouts: When you purchase a regular term life insurance policy, your beneficiaries will receive the funds and use them as needed after you die—whether that be toward final expenses, mortgage payments, or to save for their futures.

    But with an MPI policy, your benefit will go straight to the lender to pay for your mortgage, which means your loved ones won’t have access to funds. If you have other debts, your family will need to find another source of money to cover them. 

  • Decreasing benefits: Many (but not all) MPI policies are decreasing benefit policies. Decreasing benefits means that after the first few years, usually 5, the benefit amount starts to decrease as the amount remaining on your mortgage decreases.

    In comparison, term life insurance policies will have a guaranteed premium for the life of your policy.

  • Mortgage protection insurance cost: Because they’re guaranteed issue, most MPI policies have higher premiums than standard term life insurance policies.

  • Premiums are not fixed: When you purchase a term life insurance policy, you’ll have fixed premiums—meaning you pay the same amount every month for the duration of your policy.

    MPI policies often only have fixed premiums for the first few years of the term, so you might end up paying significantly more over time. 


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Is Mortgage Protection Insurance Required?

No, there’s no requirement for MPI under any circumstances. However, It’s not uncommon for banks and insurance companies to use language and sales tactics that make these policies sound mandatory.

Their sales material often contain personal details about you and your mortgage to make the sales materials sound more official, but this information is obtainable through public records.

Regardless of what the advertisements say, if you’re not interested in an MPI policy, you’re under no obligation to buy one. 

How Long Do You Have to Have Mortgage Protection Insurance?

In most cases, mortgage protection policies reflect the term of your mortgage.

So, if you have a 30-year mortgage, your MPI policy will be 30 years. And if you have a 15-year mortgage, your MPI policy would also be 15 years.

Is Mortgage Protection Insurance Worth It?

Mortgage protection insurance can be worth it in some circumstances.

If you feel as though you won’t qualify for any other type of life insurance, then an MPI policy can provide the coverage you need.

For most other people, mortgage protection insurance won’t be worth it.

mortgage protection life insurance

You will likely have other debts aside from your mortgage that will need paying if you die.

MPI policies don’t offer the flexibility to cover those costs, and healthy individuals can get a substantially larger term life insurance policy at a better rate.

Alternatives to Mortgage Protection Insurance

If you’re looking for an alternative to a mortgage protection policy, and want to get covered fast, then you should consider a no exam term life insurance policy.

If you’re willing to undergo a medical exam and have your health history reviewed, you should look into purchasing a traditional term life insurance policy

Term life insurance policies are typically the best value for your money, offering higher benefit amounts and fixed premiums.

Are you worried about your current health impacting your chances of qualifying for a regular term life insurance policy? Then you should seek out a guaranteed issue policy

These policies don’t require a medical exam, and in many cases, only require you to answer a handful of qualifying questions to be approved for coverage.

While the benefit amount won’t be as much and the monthly premiums will be higher, it will still offer the protection you need should you pass away.


No Exam Life Insurance made easy.

Agents not required.

Get quotes and sign up online without talking to an agent. But, we are here if you need us. 

Unbiased, expert advice.

Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.

Coverage in minutes.

You can get no exam life insurance coverage within minutes of getting your quotes and applying.

Optional Policy Riders

As with other types of life insurance, many companies offer customers additional riders to enhance their mortgage protection policy. These might include:

  • Disability: Your premiums are waived if you become disabled through an accident or illness
  • Additional coverage: Increasing the term of your policy
  • Other insured: Adding a spouse to your policy

Taking Action

If you’re not able to qualify for other types of life insurance, a mortgage protection insurance policy might be what you need to protect your loved ones after you pass away.

If you do decide this type of policy is right for you, be sure to make a mortgage protection insurance comparison to find the best rates.

If you prefer traditional life insurance, you can get immediate quotes and coverage by clicking here or on any of the above buttons. 

Aten-Re El

About the author

Aten-Re El is a Co-Founder and Chief Operating Officer of Simply Insurance as well as a licensed life & health insurance agent with over 11 years of experience. Aten-Re is responsible for the daily operations of Simply Insurance and building and procuring strong client relationships with our insurance partners.

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