If you've just bought a home, you've probably seen mailers offering 'mortgage protection insurance' that promise to pay off your loan if something happens to you. You've also heard that plain old term life insurance can do the same thing. As a licensed agent, here's the honest comparison most lenders won't give you.
What MPI actually is
Mortgage Protection Insurance (MPI) is a decreasing term life policy. The death benefit shrinks over time to roughly track the balance you owe on your mortgage. If you die during the term, the insurer pays the lender (or sometimes your family) the remaining balance.
What term life is
Term life insurance is a fixed death benefit (say $500,000) for a fixed term (say 30 years). If you die during the term, your beneficiary — usually your spouse — gets the full benefit, tax-free, to use however they want.
Free: MPI vs Term Life Guide (PDF)
A 5-page side-by-side comparison written by a licensed agent.
No spam. Unsubscribe anytime.
The key differences
- Beneficiary: MPI usually pays the lender. Term life pays your family.
- Flexibility: Term life proceeds can cover the mortgage AND childcare, food, college. MPI typically only kills the loan.
- Cost: For most healthy people under 50, term life is cheaper per dollar of coverage.
- Underwriting: Many MPI policies are no-medical-exam. That's convenient if you have health issues.
- Coverage shape: MPI's payout shrinks. Term life stays level.
Who MPI is actually right for
MPI makes the most sense if you can't qualify for traditional term life due to health conditions, or if you specifically want the loan paid off and don't want to leave that decision to your family. For everyone else, level term life usually delivers more protection for less money.
The bottom line
Don't buy the first mailer that lands on your kitchen counter. Run the numbers both ways. Our calculator gives you a side-by-side recommendation in under two minutes — and you don't have to give us an email to see it.