After you buy a home, you'll likely get mail offering "mortgage protection insurance." It's designed to pay off your mortgage if you die. That's a good goal — but plain term life insurance usually does it better. Here's the comparison.
Mortgage protection insurance (MPI)
- Benefit often declines as your mortgage balance drops, while the premium typically stays the same.
- The payout may go to the lender, not your family, in some products.
- Easy to qualify for, which is convenient but can mean higher cost per dollar of coverage.
Term life insurance
- Level benefit — your family gets the full amount and decides how to use it (mortgage, income, college, anything).
- Often more coverage per dollar for healthy applicants.
- Flexible: pick a term that matches your mortgage payoff, and the money isn't tied to the lender.
Which should you choose?
- Most homeowners: a level term policy sized to your mortgage (or your full coverage need) is the more flexible, cost-effective choice.
- MPI can fit if health issues make traditional term hard to get and you want simple, guaranteed-issue-style coverage.
The smart move
Rather than a policy that only shrinks alongside your loan, most families are better served buying enough term coverage to pay off the mortgage and replace income. Lock it while you're healthy — see term cost by age.
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