Understanding What’s Protected by Mortgage Protection Insurance
For most families across the U.S., they spend roughly 25-30% of their gross income on mortgage payments. It makes sense that so many seek mortgage protection insurance to make sure those payments can be made. Mortgage protection insurance (MPI) is designed to help your loved ones keep your home if something happens to you before the mortgage is paid off.
Below we’ll break down what mortgage protection insurance typically covers.
The Primary Purpose: Covering the Mortgage Balance
The primary purpose of MPI is to pay down or pay off your remaining mortgage balance if you pass away during the policy term. This means your family can stay in the home without worrying about making monthly mortgage payments during an already difficult time.
MPI and PMI and Homeowners’ Insurance (oh my!)
Homeownership typically skips the lions and tigers and bears, but it does come with a slew of confusing terms. People often confuse three types of coverage: homeowners’ insurance, mortgage protection insurance, and private mortgage insurance. Here’s how they are different:
- Homeowners’ insurance protects your property
- Mortgage protection insurance protects your family
- Private mortgage insurance protects your lender
Learn more about homeowners’ insurance compared to regular life insurance.
What Mortgage Protection Insurance Doesn’t Cover
MPI isn’t a blanket financial safety net. It does not cover property damage or repairs (that’s what homeowners insurance is for), non-mortgage debts or bills, or increases in mortgage payments due to refinancing—unless you update your coverage.
Who Benefits From MPI Coverage?
Mortgage protection can be especially helpful if you have dependents who rely on your income to stay in the home, if you don’t have enough savings or life insurance to cover the mortgage balance, or if you want a simple, predictable plan tied directly to your mortgage payoff schedule.
Get a Quote for Mortgage Protection Insurance Instantly
Overall, what you’re looking for is a policy that matches your loan balance, term length, and budget. Our mortgage protection tool is one-of-a-kind in that you can use it to design your own policy that saves you money by aligning the coverage with your loan amortization.
Try out our online mortgage protection tool to see what your custom policy would look like. You submit some basic information about yourself and your mortgage and our calculator offers customized coverage in seconds. You then have the option to further customize your recommended plan or to instantly move forward with the application.
