What is mortgage protection insurance?

A mortgage protection insurance (MPI) or mortgage life insurance helps you and/or your family make mortgage payments for you in case you die or become severely disabled and you’re unable to make any further mortgage payments.

It is easy to confuse MPI with private mortgage insurance (PMI) and mortgage insurance premium (MIP) but they are vastly different. A PMI is meant to protect your lenders if you fail to make mortgage payments. However, it will not cover you in case you die. If you haven’t paid your mortgage and you die, your home may likely go into foreclosure anyway. PMIs are taken out for conventional loans when you make a down payment of less than 20%. You can stop paying PMI if you’ve gained 20% equity on your home. 

A mortgage insurance premium is something you have to pay if you have a Federal Housing Administration (FHA) loan. An MIP is similar to PMI in that it protects the lenders in case of non-payment of the mortgage. But this is mainly meant for FHA loans. It does not protect your home in case you die. 

You could consider investing in an MPI if traditional life insurance does not work out for you. It will work as an additional safeguard for your family.