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Mortgage protection insurance is a form of life insurance that provides coverage for your mortgage in the event that you die. As the remaining balance on your mortgage declines over time, so does the amount of mortgage protection insurance. It is also referred to as mortgage life insurance and mortgage protection life insurance. The insurance payout is used to zero out the balance of your mortgage. It can be purchased online or at a bank or insurance provider.
However, it isn’t as flexible as a standard life insurance policy. The policy usually goes directly to the mortgage lender to pay off your balance, so your family doesn’t get to choose what to do with the money. However, note that mortgage protection insurance is really a bit of an archaic term and product that has largely been replaced with different types of life insurance. We outline these below so you can see which mortgage protection insurance would most benefit you and your loved ones.
Best Overall: Nationwide
Why We Chose It: As the name suggests, Nationwide offers insurance policies across the country and is a reputable company that's been in the industry for a long time.
Variety of coverage options, including term policies
Convert coverage to permanent life insurance
Customers must purchase the policy through an advisor instead of online
Medical exams are required for some applicants
Nationwide’s started out selling automobile insurance to local Ohio farmers when it was founded in 1926 in Columbus, Ohio. It later branched out to farmers in several other states and then began selling fire insurance and life insurance. Its headquarters are still located in Ohio, but it also has offices in all 50 states and sells insurance nationwide. In addition to life insurance, Nationwide offers auto, homeowners, business, renters, and rental property insurance as well as banking and retirement services.
Nationwide offers 10-, 15-, 20-, and 30-year term life insurance policies in addition to permanent life insurance. If you want to purchase a policy to pay off the remainder of your mortgage, you can do so and then convert it to a whole life insurance policy before the term expires and before you reach 65 years of age. You can get a quote for most policies online, but you need to purchase the policy from a representative on the phone.
Policy pricing varies, and some policies require a medical exam while others don’t. The cost is usually based on age, gender, occupation, smoking and drinking habits, health conditions, and more. You can choose optional riders, such as an accelerated death benefit and a waiver of the premium.
Best for 30-Year Mortgages: State Farm
Why We Chose It: State Farm offers 20- and 30-year term life insurance with money-back guarantees and fast online quotes.
Reputable company with decades of insurance experience
Detailed resources about the different kinds of policies available
Doesn’t offer life insurance policies in Massachusetts
Not as many term insurance options as other companies
In 1922, a retired farmer founded State Farm with the goal of providing farmers with competitively priced auto insurance. The company’s vision is to be a good neighbor and it still focuses on that vision and maintains its headquarters in Illinois. Today, in addition to life insurance, it offers auto, home, and specialty insurance, including rental property and pet insurance.
State Farm has a high overall financial rating and positive customer reviews. It also has an easy-to-use website where you can get online quotes for term insurance and find local agents to give you quotes and more information on other types of policies, including whole and universal life insurance policies. If you purchase a 20- or 30-year term life insurance policy, your beneficiaries can use that money to pay off your remaining mortgage balance and they can choose how and when to disperse the funds.
Most policies do require medical exams and coverage is offered in 49 states, with Massachusetts being the exception. If you purchase a Return of Premium Term Life insurance policy, make all of your payments on time, and don’t use any of the coverage, you will get reimbursed for the cost of the policy at the end of the term.
Best for Long-Term Coverage: Legal & General America
Why We Chose It: Legal & General America offers a variety of life insurance policies with centuries of insurance industry experience, including a lengthy, 40-year term policy.
Long history in the insurance industry
Long-term insurance offered up to 40 years
Up to $10 million in life insurance coverage
Lesser known company than some on our list
Annual policy fees
Have to buy policy through an agent, not online
Legal & General was founded by a group of lawyers in a coffee shop in 1836 in London, England. Originally, it only provided insurance for those in the legal profession. The company is now known as LGA and has expanded overseas into one of the world’s largest insurance companies. It’s also a part of Banner Life and William Penn and pays almost $1 billion in claims to over 3,500 families and businesses every year. In addition to life insurance, the company provides retirement and investing services.
The company offers lengthy term life insurance policies, including one for 40 years—which is ideal for younger couples and families who want to ensure their entire mortgage is covered. You can also add on a supplemental policy of up to 20 years. Coverage goes up to $10 million and can be purchased through a licensed agent in your state. In addition to term policies, the company also offers universal coverage but no whole policies. You can convert a term policy to a permanent policy, which offers extra add-ons like coverage for children and accelerated death benefits. Pricing is available through your agent and applicants may still qualify for some sort of coverage with underlying health issues and tobacco usage.
Best for Quick Coverage: Haven Life
Why We Chose It: Haven Life is a new kind of life insurance company that operates online and provides quick coverage that is easy to purchase and includes extra benefits.
Coverage options that don't require a medical exam
You can purchase the policy online
Term coverage up to $3 million
Shorter company history
Permanent life insurance coverage isn’t offered
Coverage varies by state
Haven Life was founded in 2013 as a MassMutual-backed startup. Its goal is to provide customers with a simple, transparent, and affordable way to purchase life insurance completely different than most other providers. You can sign up for a policy online with Haven and get up to $500,000 in coverage with no medical exam and up to $3 million in coverage with a medical exam. Coverage is available to applicants aged 18–64 nationwide. You can use one of Haven’s policies to protect your mortgage and pay it off in the case of your death.
It specializes in two types of life insurance, which it names Haven Term and Haven Simple. The term policy includes coverage up to $3 million and includes a will at no additional cost. It’s issued by MassMutual and is available in all 50 states. Policies start at $13.45 per month. Terms of 10, 15, 20, and 30 years are available.
The Simple policy offers life insurance coverage in most states, and available terms are 5, 10, and 15 years. Coverage ranges from $5,000 to $500,00 and starts at $15.75 per month. A medical exam is not required.
Mortgage protection insurance has mostly been replaced with life insurance, and we reviewed insurance providers that offer various different types of policies, varying term lengths, qualifications, and types of applications. Each company has something unique to offer, but overall we recommend checking out Nationwide. It sells many different types of policies in all 50 states, is a highly rated company with extensive insurance knowledge, and allows you to convert term life insurance policies into permanent coverage.
Frequently Asked Questions
What Is Mortgage Protection Insurance?
Mortgage protection insurance is a specialty type of life insurance used to pay the balance on your mortgage after your death. This type of insurance, however, has been almost completely replaced with various life insurance products. Mortgage protection insurance isn’t popular because most people no longer stay in one home for the duration of their mortgage (usually 30 years). Instead, people may refinance, sell their home, or even rent out their home and purchase another one.
When Do You Need Mortgage Protection Insurance?
Mortgage protection insurance isn’t required. It’s an optional insurance policy that you can purchase from selected banks, online marketplaces, and life insurance companies and agents. You used to get mortgage protection insurance if you owned a home with a mortgage and had a family. Nowadays, it’s more common to purchase a term life insurance policy so that the beneficiaries can choose how to spend it after you die.
However, if you have pre-existing health conditions and won’t qualify for life insurance, you may want to consider a mortgage protection insurance policy.
What Is the Average Cost of Mortgage Protection Insurance?
As is the case with most types of insurance, the cost of mortgage protection insurance varies depending on a number of factors, including the policy holder’s age, occupation, geographic location, risk factors, and the mortgage balance. If the remaining balance of your mortgage is $120,000, then you should expect to pay a minimum of $50 to $75 per month. This is more expensive than the average term life insurance policy payment for the same amount of coverage.
How We Chose the Best Mortgage Protection Insurance
We researched nine different mortgage protection insurance providers and narrowed it down to our top picks that include reputable companies with overall positive reviews that offer insurance policies in multiple states. We also compared the types of insurance offered, additional features and services, customer service accessibility, and how easy it is to sign up for a policy.