One product tied to your lender. One that stays with your family.
Mortgage protection insurance (MPI) is marketed aggressively to new homeowners. It sounds logical: if you die, the mortgage is paid off. But the devil is in the details — the death benefit decreases as your loan balance decreases, while your premium stays the same. A level term policy covers the same period, usually costs less, keeps a fixed death benefit, and pays your family instead of the lender. In almost every case, term wins.
| Mortgage Protection | Category | Term Life |
|---|---|---|
| Decreases (follows loan balance) | Death benefit over time | ✓ Level — stays fixed |
| The lender | Beneficiary Critical difference | ✓ Your family |
| Level | Premium over time | Level |
| Worse — benefit shrinks, cost stays | Cost per dollar of coverage | ✓ More efficient |
| ✓ Often no | Medical exam | Usually yes |
| Tied to the mortgage | Portability | ✓ Follows you anywhere |
| Coverage gone on payoff | Flexibility if family sells home | ✓ Continues unchanged |
| Can't qualify for term | Best scenario for use | ✓ Almost all other cases |
Mortgage protection insurance is one of the most oversold products in the industry. It feels intuitive — protect the mortgage — but it's structurally inferior to term: your benefit shrinks while your premium stays flat, and the payout goes to the bank instead of your family. With a term policy, your family gets a check. They can pay off the mortgage, invest the rest, or move — their choice. The one narrow case for MPI: if a health condition prevents you from qualifying for any term policy, guaranteed-issue MPI may be your only option.
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