Mortgage Life Insurance

Mortgage Life Insurance

Why Buy Mortgage Life Insurance?

It has often been said that “home is where their heart is.” But, should a family suddenly be unable to pay their mortgage because of the loss of a breadwinner, the physical, financial, and emotional consequences could truly be devastating.  #1 reason Why people buy mortgage life insurance

While many people have insurance to protect their health, auto, and income, oftentimes providing for the payoff of a mortgage debt goes uncovered.  

Unfortunately, this can cause a disheartening and stressful effect on loved ones who may be forced to give up their home if they are unable to continue making payments following a primary wage earner’s untimely passing.

If anyone you love is counting on you to keep them protected in the security of their home, then there could be some devastating consequences, if you would suddenly be unable to do so.

Coupled with the emotional loss of a loved one, additional factors could also include the potential loss of your family’s home – drastically reducing your loved ones’ lifestyle as well as uprooting their entire well-being.

But there is good news.

Those who have loved ones counting on them for the mortgage payment on their home can be offered the assurance of never having to face the loss of that home – even in an unforeseen circumstance.

You can plan for this type of event with Mortgage Life Insurance.  This kind of insurance policy will pay off the mortgage balance, free and clear.  

For as little as $15 a month a 35 year old male, in good health, could have up to $250,000 in coverage with NO medical exam, check rates HERE.

You can also purchase mortgage life insurance for a higher amount of coverage, over your mortgage balance, to provide additional living expenses, burial cost, college education, pay off other debts and anything else.

Controlling the Unpredictable

While nobody likes to think about their untimely passing, having a good solid plan in place can help you to control at least some of the variables that can turn an already unsettling situation somewhat more bearable for those who are left behind.

One of the best ways to ensure that the ones you love can maintain their current lifestyle – while remaining in their home – is through the purchase of mortgage life insurance.

This type of coverage will provide cash proceeds for the payoff of your home’s mortgage balance, allowing your loved ones to continue on without the disruption of losing their home, and providing you the ability to make good on your promise of always keeping them safe.

How Does Mortgage Life Insurance Work?

Unlike other types of life insurance plans, mortgage protection life insurance will only pay benefits when there is an unpaid mortgage balance in place.

In most cases, these policies may be purchased in conjunction with your mortgage loan repayment schedule, helping to ensure that the life insurance coverage will remain in effect until the mortgage has been fully paid off.

In addition, even though mortgage life insurance plans work in a similar fashion to traditional life insurance policies where proceeds are paid out on the death of the insured, often times these plans do not require the same types of stringent underwriting requirements such as medical exams or blood samples in order for the insured to qualify for coverage.

This means that even those who may have certain medical related pre-existing conditions could qualify for coverage – allowing their loved ones the peace of mind that the mortgage will continue to be paid – even if they are no longer there.

Factors To Consider

There are several factors that must be considered when designing a mortgage life insurance policy. These can include:

  • Amount of Death Benefit Proceeds – When putting together the ideal mortgage life insurance policy, the amount of death benefit proceeds should at least match the amount of the initial mortgage balance. This will help in making sure that should the unthinkable occur, the entire amount of remaining mortgage debt will be paid off.
  • Length of Coverage – It is important to ensure that the mortgage life insurance policy will last as long as the remaining mortgage balance does. Otherwise, if the policy ends early, your loved ones could be left with a debt balance that they are unable to pay, potentially resulting in the loss of the home.

Life Insurance for Mortgage

Life Insurance for Mortgage

Obtaining a mortgage is typically the biggest debt that individuals and couples will ever take on during their lives – and while the purchase of a new home is exciting, it does come with some potential perils that must be protected.

The biggest of these is the untimely death of the borrower(s) and subsequently, the potential loss of the family home due to an unpaid mortgage balance.

Why Own Life Insurance for Mortgage Protection?

In the event of a mortgage debtor’s death, a mortgage life insurance protection policy can offer your loved ones the peace of mind in knowing that they will be able to pay off the home in full, therefore eliminating the potential financial struggles that can be associated with losing your income.

Unlike private mortgage insurance that benefits the mortgage company, a life insurance for mortgage protection will pay the proceeds directly to your nominated loved ones for the purpose of paying off the balance of the mortgage debt.

This can allow them the benefit of using the family’s remaining income for other pressing needs such as food and utilities, as well as the ability to leave savings and other retirement assets in place to be used for their originally intended purposes.

How Life Insurance for Mortgage Protection Works

Life insurance that is purchased for mortgage protection typically entails the obtaining of a level term insurance plan where the benefits remain constant throughout the life of the policy. Unlike decreasing benefit policies in the past, today there are dozens of highly rated insurers that will provide a set amount of proceeds that your loved ones can count on.

Many of these top carriers may even allow an applicant to qualify for coverage without the need to undertake a medical exam or be subject to additional stringent underwriting criteria. This means that your loved ones will attain the peace of mind in knowing that their home and their security will be protected.

Mortgage Insurance Protection

Mortgage protection insurance

Mortgage insurance protection could quite possibly be the most important type of life insurance coverage you can own. With this kind of plan, your loved ones will be able to pay off any current mortgage debt upon your death and still maintain the family home – even if you are no longer there to support them.

What Makes Mortgage Insurance Protection Different?

Although mortgage insurance protection policies have many similarities to traditional life insurance coverage, they stand out in that their proceeds are earmarked for the specific payoff of your unpaid mortgage debt.

In doing so, your loved ones will benefit in a number of ways, including:

  • Payoff of What is Most Likely Their Largest Debt Obligation. Certainly, mortgage insurance protection will allow those you love to pay off what is typically the biggest debt held by individuals – that of a home mortgage. By paying off the mortgage, your loved ones will be able to continue living in the home you have provided for them – essentially allowing you to make good on your promise of ongoing shelter and security.
  • Ability to Make Good on Other Pressing Expenses. Without the need to pay a hefty monthly mortgage payment, other living expenses such as food and utilities may be more easily dealt with as your loved ones move forward.

How Mortgage Insurance Protection Life Coverage Differs From PMI

Mortgage insurance protection life insurance is different from the PMI, or private mortgage insurance, that is paid to the mortgage company. Whereby PMI helps to protect the mortgage company itself from the debtor’s untimely death, mortgage insurance protection life pays the death benefit proceeds directly to the nominated loved ones of the insured.

This option allows your family the control of paying off this large debt – therefore giving them the peace of mind in knowing that they can maintain their current lifestyle as well as their current home.

How to Qualify for Mortgage Insurance Protection

Qualifying for mortgage insurance protection life may be easier than you think. Unlike most traditional forms of coverage, mortgage life policies oftentimes do not require the numerous stringent qualification criteria such as blood samples and medical exams.

This means that an applicant who has certain types of pre-existing medical conditions could still potentially qualify for benefits – even if they were previously denied for other forms of life insurance coverage. With this in mind, your loved ones will be assured of maintaining the comforts of their home without the financial stress of mortgage payments in an already emotionally difficult time.

Mortgage Protection Insurance

Mortgage protection insurance

One of the biggest debts people will ever take on is that of a home mortgage. In many cases, this mortgage represents the debt that borrowers pay in return for offering the safety and protection of a home.

This is why it is imperative to ensure that your loved ones possess the additional assurance that their home will still be there – even if you can’t be, due to an untimely death.

Often times, because of uncontrollable circumstances, homes can be lost due to the inability to continue the payment of the mortgage when a breadwinner passes away.

Mortgage protection life insurance can help you to keep your promise of providing your loved ones with the comfort and security of a home.

Why Consider Mortgage Protection Life Insurance?

Purchasing a home is a big commitment – not just to the mortgage company for the payoff of your debt, but even more so to those that you care about providing comfort and shelter for. If the unthinkable were to happen, your loved ones will be emotionally devastated. So why cause them the additional hardship and stress of potentially losing their home?

Mortgage protection life insurance provides you a way to ensure that your home mortgage debt will be paid off – allowing your loved ones to maintain their current lifestyle, even in the midst of emotional trauma.

How Does Mortgage Protection Life Insurance Work?

Because it is a life insurance policy, mortgage protection allows for the payout of death benefit proceeds upon the passing away of the insured. However, unlike most other types of policies, many of these plans may be purchased without the more stringent underwriting requirements of more traditional coverage types.

Mortgage protection life insurance plans are often purchased in conjunction with an applicant’s mortgage loan repayment schedule. This way, the coverage on the policy is assured of remaining in effect until the final payment on the mortgage balance is made – and allowing loved ones the peace of mind in knowing that they will be able to remain in their home regardless of potential unforeseen circumstances.

We recommend purchasing a mortgage life insurance from a licensed insurance broker Vs. the mortgage company.  Why, because you will have more options, which means lower cost. 

Example Mortgage Life Insurance 

1. $250,000 home mortgage balance  $250,000 mortgage life insurance
$00.00 Zero Balance Mortgage

2. $250,000 home mortgage balance   $500,000 mortgage life insurance
 $00.00 Zero Balance Mortgage
+ $250,000 Additional living money

The Real Benefits of Mortgage Protection Life Insurance

In addition to just paying off the mortgage, other benefits of mortgage protection life insurance can include:
Protection of Your Loved Ones’ Financial Security. Protecting your loved ones’ home is directly related to the protection of their financial security. Given the ability to pay off the mortgage – which is often the biggest monthly payment due by most individuals – your loved ones will not have to struggle financially, allowing them to make good on other necessary expenses.

  • Qualification of Benefits – Even with Pre-existing Conditions. Unlike most traditional life insurance plans, mortgage protection may allow you to qualify – even with certain pre-existing medical conditions. This could mean that your loved ones will obtain the protection that they need when other forms of life insurance protection may have been denied.

Protecting Your Mortgage with Life Insurance

Life insurance for mortgage protection

As you go through life, there are many reasons to save and invest. Likewise, there are many reasons to protect what you have – such as your health, your home, and your income. One item that sometimes tends to be overlooked, though, is your mortgage. Certainly, you strive to make your mortgage payments every month. But, if you were to suddenly pass away, would your family be able to continue living in your home, or would the sudden lack of your income make paying the monthly mortgage impossible, causing them to not only endure a change in residence, but likely a big change in lifestyle as well?

There are many individuals who find themselves in the unfortunate situation of needing to sell – or worse, lose to foreclosure – their beloved home following the loss of a family member. However, there are ways to protect your home – even if the worst should occur.

 What is Mortgage Life Insurance?

Mortgage life insurance, also referred to as mortgage protection insurance, can offer your loved ones the protection of being able to pay off your mortgage should you pass away. Often times, this type of insurance offered when you are filling out the loan papers for your home mortgage.

In the event of your untimely death, a mortgage life insurance policy can offer your family the peace of mind in knowing that they will be able to pay off your home mortgage in full – thus eliminating the struggles that can be associated with losing the income of a primary mortgage payer.

Although mortgage life insurance works the same as regular life insurance with the payout of death benefit proceeds upon the insured’s death, in many cases these policies require a minimal amount of underwriting. Often, there is no medical exam or blood sample required on a policy application. This makes mortgage life insurance, especially valuable for someone who may have preexisting conditions that could preclude them from obtaining other types of life insurance coverage.

 Why You Should Consider Having Mortgage Life Insurance

There are a variety of reasons why homeowners should consider purchasing mortgage life insurance.

These include:

  • Protecting your family’s home. First and foremost, mortgage life insurance will provide your family the ability to pay off your home mortgage, allowing them to stay in their home and maintain their current lifestyle. It is never easy to lose a loved one, but losing the family home could make the situation even more devastating to your family. 


  • Protecting your family’s financial security. Certainly related to protecting your family’s home is protecting your family’s financial security. By having the ability to pay off the home mortgage, your loved ones will not be left with a large amount of mortgage debt – debt that could potentially cause them to struggle financially and forgo the payment of other important expenses for the purpose of protecting the home.


  • Minimum health screenings at policy application.For those who may have trouble qualifying for other types of life insurance, the minimal health screenings that are required for mortgage life insurance may be a good option for obtaining protection, even if you have certain preexisting conditions. 

How much is mortgage life insurance?

There are a few factors that will determine the cost of mortgage protection insurance.  Gender, age, height/weight ratio, smoker, amount of coverage, any health conditions and how long coverage is needed.

Here is a sample of $250,000 – 20-Year Mortgage Life Insurance for a Female with various health ratings

how much does mortgage life insurance cost

Types of Mortgage Life Insurance

There are several different types of mortgage life insurance available on the market today. This gives potential policy holder's options for the right coverage, depending upon their individual situation. These include:

  • Term life insurance, mortgage protection. This type of term life insurance can be purchased in conjunction with your mortgage loan repayment schedule. Therefore, the coverage on these policies will stay in effect until the mortgage end date, at which time the life insurance protection expires as well.


  • Reducing term life mortgage protection. With this type of policy, the death benefit proceeds amount on the life insurance policy will decrease as the balance that you owe on your mortgage decreases.


  • Return of premium life insurance, mortgage protection. This type of life insurance coverage will require a higher premium than a regular term life policy, but it also offers the advantage of allowing your premiums to be returned if the policy that you purchased stays in effect until the end of its term.

With the payment of a mortgage being the primary reason that people obtain life insurance coverage today, it is nice to have options for this type of protection. Allowing your family the peace of mind in knowing that they can remain in their home – even should the unexpected occur – is one of the best gifts that you can give them.

What is Mortgage Protection Insurance?

Life Insurance

Having mortgage protection insurance is essential for anyone who owns a home – and especially if others are counting on you to help keep them safe in that home with the payment of the mortgage.

Mortgage protection insurance policies are specifically designed to pay off mortgage debt should the borrower face an untimely death. These plans are especially useful for those who have families or other loved ones counting on their income to make the regular mortgage payment – and who would face devastating consequences should that no longer be an option.

These types of plans are different from a traditional life insurance policy where a death benefit is simply paid out when the insured passes away. With a mortgage protection plan, the life insurance policy benefits don’t actually pay out unless the insured borrower dies while the mortgage still has a remaining balance.

What types of Mortgage Protection Life Insurance Are Available?

There are two primary types of mortgage protection life insurance policies. One, decreasing term, allows the amount of the death benefit proceeds to decrease as the outstanding balance of the mortgage goes down – until both reach zero. Over the years, however, this type of mortgage protection life insurance has not been utilized by borrowers nearly as much as policies that contain a level amount of death benefit proceeds.

This type of mortgage protection life insurance works similar to a level term policy whereby the death benefit proceeds will remain the same throughout the life of the policy. The level benefit option would likely work especially well for an insured borrower who has a mortgage consisting of interest only payments and a constant amount of the remaining balance, although these plans can also help in covering both a first and second mortgage, as well as a mortgage balance plus other potential debts that the insured may have.

We recommend a fixed death benefit amount - the amount of insurance stays the same regardless of the mortgage balance.  Think in terms of how many more years until the mortgage is paid off when buying mortgage protection.

Mortgage protection insurance calculator

Calculating the amount of coverage you need is simple.

1. Amount of mortgage balance
2. Annual living expenses X amount of years income needed
3. Any college education X number of children
4. Any burial expenses

= The total dollar amount of mortgage life insurance needed $ ___________

Can You Qualify for Mortgage Protection Life Insurance?

Although mortgage protection life insurance policies work in a similar fashion to regular life insurance plans, often times the applicant for mortgage protection life can qualify based on a minimal amount of underwriting requirements.

This means that they may not be required to submit a medical exam or a blood sample – items that are typically needed for other more traditional types of coverage. Therefore, mortgage protection life insurance could be especially attainable for a mortgage holder who has certain preexisting medical related conditions and who may have been turned down for other forms of life insurance protection.

The premium that is charged for a mortgage protection life insurance policy will depend upon several factors, including the applicant’s age, the length of time that coverage will be needed, and the amount of coverage that is being applied for.

Mortgage Life Insurance protection

Mortgage Life Insurance protection

Mortgage life insurance protection explained.

Most people buy life insurance for one basic reason, to pay off the mortgage balance and provide additional living expense for their family do to an untimely death.  The history of “mortgage life insurance protection” came out of the basic need for life insurance and mortgage companies first wanting a method to insure the debt doesn’t go into default and second another source of revenue.

Mortgage companies and the banking institutions realized the potential for profit, protection package with their loans.  It was a win-win for both investment community and consumer at first glance.  The big winner, as in most cases, is the financial institutions writing the business. 

Mortgage life insurance policies are structured to follow the amount of the outstanding home loan balance down to zero.  As an example, if you have a $200,000 home loan for thirty years and mortgage life insurance initial amount is the same $200,000 of coverage.  Fast forward fifteen years and the loan balance is now $100,000 and so is the amount of mortgage life insurance, as the loan amortizes, or decreases by the amount of outstanding principal due to the lender.  The problem for the consumer is they are still paying the same amount every year for a policy that’s declining in value.  Sure, it will pay off the remaining balance, but you’re still paying for the original amount of the loan, $200,000 with a $100,000 benefit.

Years ago people generally keep a home on average 12 years and with the limited required underwriting to get a mortgage life insurance policy issued it was a no brainer.  In recent history that average has dropped down below 7 years, for home ownership and with homes being refinanced every couple years, many, if not all lenders do not participate or offer the program.  Even the ones that, do we’d recommend against for the reason listed above, declining benefit and a fixed premium.

The other thing that wasn’t mentioned is lender sponsored mortgage life insurance has the beneficiary as “themselves,” the banker, mortgage company or financial institution… thank you very much.  Yep, the policy is paid to the lender and not the family.  That’s kind of another reason they fell out of favor with bloggers and financial advice folks.

What Mortgage Life Insurance We Recommend

We recommend mortgage life insurance, but not through the lender for several reasons:

  1. Pays your beneficiaries directly not the lender
  2. The amount of coverage remains the same the entire length of the policy
  3. A new policy does NOT have to be issued every time you refinance or change lenders
  4. You can get more coverage than the value of the home or outstanding balance
  5. The policy is not tied to one home if you decide to sell or move
  6. You can choose the length of coverage from 10-15-20-25-30 years
  7. Policies issued in as little as 24-48 hours
For Additional Information on Life Insurance to pay off your Mortgage

Prior to purchasing a mortgage protection life insurance policy, it is a good idea to fully understand how these plans work, the benefits that your loved ones will receive, and other specific policy conditions.

Working with a company that specializes in providing mortgage protection life insurance can help to ensure that you are receiving the proper amount of coverage at a competitive price – even for mortgage amounts of up to $1 million.

If you are ready for free instant Mortgage Life Insurance quotes?  Let's get started below.  

Remember, there is no cost or obligation, just quotes from leading life insurance companies.

About the Author

John Espenschied is a long-time veteran of the insurance industry. He has worked in various positions within the industry for over 20 years, and for the past 15 years, he has been the owner and operator of Insurance Brokers Group, an independent insurance agency. John loves advising people on the insurance that meets their needs and goals, whether it be for personal or commercial purposes.

John is married to Melissa, and they have three children together, as well as three grandchildren. In his spare time, John enjoys golfing and playing in the golf league, biking to their local brewery along the Missouri river, and going on motorcycle rides when the weather is nice.

John Espenschied

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