Term life vs. lender mortgage insurance
| Term life insurance | Lender mortgage life insurance | |
|---|---|---|
| Who gets paid | Your beneficiaries, who decide how to use it | The lender |
| Coverage over time | Stays level | Often shrinks with your balance |
| Price | Often lower for healthy buyers | Often higher, with limited underwriting |
| If you refinance or move | Coverage stays with you | Usually ends |
How much coverage to get
Start with your mortgage balance, then add other needs such as income replacement and college. Choose a term at least as long as the years left on your loan.
Private mortgage insurance is different
PMI protects your lender if you stop paying your mortgage. It doesn't pay anything to your family. Mortgage protection life insurance does.
Frequently asked questions
Do I need mortgage protection insurance?
If your family would struggle to pay the mortgage without your income, some form of life insurance is worth considering. A standard term policy often does the job at a lower price.
What term length should I choose?
Match the years left on your mortgage, or go longer if you also want to cover income or kids.
Can I cover both my spouse and me?
Yes. Many couples each buy their own term policy, which usually offers more flexibility than one joint policy.
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