Mortgage Protection Insurance Quotes & Reviews

What is Mortgage Protection Insurance?

Mortgage protection insurance is similar to life insurance, in that it is paid out after one’s passing. However, the way the insurance proceeds are used differ.

Mortgage protection insurance helps cover the principal and interest portions of a mortgage instead of providing funds that can be used in any way.

With this type of insurance, the proceeds are sent directly to the mortgage lender, not to the insured homeowner.

The insurance policy doesn’t only cover the death of the homeowner. If a homeowner becomes disabled and cannot work, the insurance may cover the mortgage and interest payments.

Depending on the policy, it may also help cover mortgage payments for job loss or other life events. These differences are referred to as riders.

Mortgage Protection Plan Riders

What is an insurance rider? It is simply an additional option that can be added to an insurance policy. 

With mortgage protection insurance, riders come into play when the applicant wishes to have additional coverage included in the policy. This coverage can include life events outside of death that might impact one’s ability to pay their mortgage.

Critical Illness Rider

With this rider added on, a lump sum payment can be made according to the amount purchased if the homeowner is diagnosed with an illness covered by the rider.

The suggested amount is 12 to 24 months’ worth of mortgage payments, but homeowners can purchase up to 100% of the mortgage amount in case it is needed.

Unemployment Rider

Buyers may wish to add on the unemployment rider if it’s not already included in the policy. This covers the buyer if they lose their job involuntarily, as long as the reason for this is covered by the policy.

There may be a waiting period before coverage begins for this rider, but once it does start, it can cover up to six months of mortgage payments while the homeowner looks for a new job.

Return of Premium Rider

Some MPI companies will offer a rider that enables the buyer to receive a refund for all premium payments. Applicable fees can be deducted from this when it is used.

This can only be used once the policy term has ended and may not be able to be obtained if the mortgage was used for unemployment, illness, or other temporary reasons before the policy’s end.

How Does Mortgage Protection Insurance Work?

Once a mortgage protection policy is obtained, the homeowner makes monthly payments to cover the insurance premium.

Instead of the homeowner choosing the beneficiary, the mortgage lender is the default beneficiary. Over time, the amount that may be paid out decreases, since the mortgage decreases as principal payments are made.

If the homeowner dies, the remainder of the mortgage will be paid directly to the lender. If the homeowner suffers a covered injury or another event, the insurance will cover the mortgage payments for a specified amount of time.

Get an MPI Quote

The first step is to get a quote for mortgage protection insurance. Anyone is able to apply for MPI. The monthly premium, however, will depend on the applicant's age, income, mortgage, and other mitigating factors.

Choose an MPI Policy

Policies will differ for many reasons, including price, coverage, riders, and eligibility. Once you find the policy that best suits you, it is best to lock down the policy before any health or income factors change and effect your monthly premium.

Get Peace of Mind

Whether the mortgage protection insurance is to cover yourself or a loved one, rest assured knowing that their ability to pay for their mortgage is protected. Due to the uncertainty of a life event, the ability to afford home payments is crucial.

FAQ

While the cost of mortgage protection insurance can vary for a number of reasons, the monthly premium for MPI can range from $5 per month to $45 per month. Generally speaking, the cost of MPI changes depending on the age of the applicant, the amount of coverage, and the coverage term.

MPI can be purchased from a mortgage lender, a private insurance company, or through a life insurance provider. Not all insurance companies offer this type of insurance, as it is frequently rolled into a full life insurance policy. MPI providers that we review include AIG, Americo, Athene Annuity, Foresters Financial, Global Atlantic, John Hancock, Mutual of Omaha, Royal Neighbors of America, and Transamerica.

If there is any concern that you or a loved one may become unable to afford their mortgage payments, then a MPI policy can be an affordable reassurance.  Since MPI proceeds are paid directly to the lender, the policy can be effective for ensuring the funds are used properly and for good use. It is important for homebuyers to compare income and assets to any debts they might have to determine if they’ll need this type of coverage. 

PMI, or private mortgage insurance, is similar to MPI in that it insures the ability to pay the mortgage. The main difference is that PMI can be required by the lender. This type of policy is required on most loans if the home buyer uses a down payment of less than the standard 20%. MPI insurance can be canceled at any time, but PMI insurance can only be canceled once the equity in the home reaches 20% or higher.

Mortgage protection insurance is not required to purchase a home. Private mortgage insurance, which is different, may be required by the lender. However, MPI is something that the buyer can choose to purchase if they want to protect their ability to afford mortgage payments.

While mortgage protection insurance and life insurance have many similarities, the major difference is with MPI the policy holder cannot choose the beneficiary. The beneficiary of an MPI policy will always be the mortgage lender. Since the MPI reduces in value as the mortgage is paid off, there will not be any excess funds to be retained by the family. 

Unlike many life insurance policies, MPI policies have guaranteed acceptance. This means applicants will not be turned down for a policy because there is no underwriting process with MPI. The cost can vary based on the homeowner’s health or occupation, but just about anyone can obtain a policy. This means that MPI can be more expensive than life insurance for the same amount of funds.

There are also differences in the rules and regulations. With life insurance, the balance on the policy stays the same over time, while it lowers for an MPI policy as the mortgage is paid off. On top of this, there may be limits on when the policy must be purchased, usually within two years of buying the home. Life insurance, on the other hand, can be purchased at any time.

Since an MPI policy is not required, it can be canceled at any time. Homeowners may prefer to cancel it to save money once they have a significant amount of equity in their home. The term of the MPI is generally for the length of the mortgage, which is often 15 or 30 years. It can also be limited by the homeowner’s age, as older buyers are more likely to experience a covered event compared to younger buyers. 

Mortgage Protection Plan Reviews

AIG

Americo

Athene Annuity

Foresters Financial

Global Atlantic

John Hancock

Mutual of Omaha

Royal Neighbors of America

Transamerica

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