Best Mortgage Protection Insurance Companies of 2021

July 3, 2021

Mortgage protection insurance is a kind of insurance policy that covers your home loan in case you die, with some policies also covering mortgage payments if you become disabled. With a policy duration of up to 40 years, it offers declining coverage, which continuously decreases as you pay off the mortgage.

Unlike a traditional insurance policy, in the event of the policyholder’s death, the lender will receive the payout, which will be used to pay off the remaining mortgage to the home.

Let us take a look at some of the best mortgage protection insurance companies in 2021. They have been evaluated based on the type of policies, premium cost, reputation, financial stability, and customer satisfaction.

The mortgage protection insurance companies that we have picked include:

Mortgage Protection Insurance Explained

A lot of people know what a mortgage and life insurance are. However, when they are asked the question, “What is mortgage protection insurance?” they draw a blank.

Mortgage protection insurance is used to pay the remaining balance on your home mortgage after your death (with some policies also when you become disabled). It is different from traditional life insurance policies since the death benefit goes to the mortgage lender rather than the policyholder’s beneficiaries.

However, today, the mortgage protection plan has almost completely been replaced by other types of life insurance products. This policy is no longer popular since people tend to move often. Customers now prefer to rent out their home, sell it, or refinance it, depending on their circumstances, rather than stay in one place for the duration of the mortgage.

Hence, many insurance companies now offer term coverage to help families cover the value of the mortgage and other financial needs when a loved one passes away.

Product
Rating
Key Features
Website
1
OVERALL RATING
Expert Review
  • An excellent option for military veterans and their families
  • Flexible term policies (10–30 years)
  • Numerous add-ons
  • $30 per month for a 30-year term policy with $500,000 coverage for a healthy 33-year-old woman
PRICE: $
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2
OVERALL RATING
Expert Review
  • Money-back guarantee on premium
  • Availability in all states except Massachusetts
  • Excellent customer reviews
  • $16 per month for a 15-year term policy with $500,000 coverage for a healthy 33-year-old woman
PRICE: $
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3
OVERALL RATING
Expert Review
  • Easy conversion from term to whole life
  • Online quotes available
  • Various term, variable life, and whole life insurance plans
  • $16 per month for a 15-year term policy with $500,000 coverage for a healthy 33-year-old woman
PRICE: $
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4
OVERALL RATING
Expert Review
  • Up to 40 years of mortgage protection
  • Rider packages available
  • Easy conversion from term to permanent policies
  • $27 per month for a 30-year term policy with $500,000 coverage for a healthy 33-year-old woman plus a $60 annual fee
PRICE: $
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5
OVERALL RATING
Expert Review
  • Affordable premiums for seniors
  • Free accelerated death benefit and terminal illness coverage
  • Easy conversion from term to permanent policies
  • $91 per month for a 15-year term policy with $300,000 coverage for a healthy 62-year-old woman
PRICE: $
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6
OVERALL RATING
Expert Review
  • Applicants up to 85 accepted
  • No medical exam on some policies
  • Great offers for seniors
  • $13.12 per month for a 10-year term policy with $250,000 coverage for a healthy 35-year-old woman
PRICE: $
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USAA mortgage protection insurance is one of the best options for eligible military veterans and their families. It is one of the best-known insurance providers in the country, which offers a wide range of coverage options that can be conveniently bought online or through its mobile app.

USAA has been providing various financial products and services for military personnel for almost a century now, including loans and credit cards as well as both short and long-term insurance coverages.

To buy mortgage protection insurance from USAA, you will need to become a member. Veterans and current service members are automatically eligible, and so are their spouses and children.

USAA offers term, permanent, and universal life insurance policies, all of which provide a number of benefits. Moreover, the term policies include various flexible options, including terms of 10 to 30 years, which can also be turned into whole life insurance later on.

In addition, the insurer offers different add-ons like an accelerated death benefit and severe injury rider. Plus, it also provides the option of adding more coverage for specific life events like purchasing property, getting married, and having a baby. If you are searching for mortgage protection insurance, USAA can upgrade your life insurance plan to provide coverage for a bigger mortgage.

Cost: A 30-year policy for a healthy 33-year-old woman with $500,000 coverage costs $30 per month.

Financial Strength: USAA has an A++ (Superior) rating from AM Best, which proves its exceptional financial strength. 

PROS:
  • A wide range of flexible coverage options
  • Great for military personnel and their families
  • An option for retiring service members to replace SGLI after leaving active duty with the ability to lock in premiums
  • Available in all 50 states
  • Possibility to convert term life insurance to whole life insurance
CONS:
  • Only available to military families
  • Medical exam required

If you are looking for 20- to 30-year term life insurance with a money-back guarantee for your premiums, the State Farm is one of the best alternatives. With a return of premium feature, you get back all the money you put in the policy at the end of the term if you have made payments on time and have not used any of your benefits. However, it does require a medical exam.

State Farm was founded in 1922 to provide auto insurance to the farmer community. Today, it still offers that as well as a range of other types of insurance like home insurance, rental property insurance, and pet insurance.

It covers all the states except for Massachusetts. You can buy term policies online and find an agent to work with who can give you information on different types of policies and accurate quotes.

Cost: Premium costs are similar to USAA. A 33-year-old healthy woman has to pay $35 per month for $500,000 coverage for 30 years. This life insurance policy can be used to pay off the mortgage as well as other expenses of the family. The quote does not take into account rider packages like child or spouse protection and disability waiver of premium.

Financial Strength: State Farm has good customer reviews as well as high financial ratings. Like USAA, it holds an A++ (Superior) rating of financial strength from AM Best. JD Power ranked State Farm as the No. 1 life insurance provider of 2020, which shows its excellent customer service and satisfaction.

PROS:
  • Money-back guarantee on premiums
  • Online quotes for insurance policies
  • Plenty of experience in the insurance industry
  • Detailed information on different policies
  • High customer ratings
CONS:
  • No coverage in Massachusetts
  • Not as many term life insurance options compared to other insurers
  • Limited term lengths
  • Agent required even when buying a life insurance policy online

Nationwide offers a range of insurance policies in all states and is one of the most reputable insurance companies in the US. It was founded in 1926 to sell auto insurance to farmers in Ohio. Later, it branched out into other insurance policies, including life insurance, homeowners, renters, business insurance, and other financial services.

Nationwide offers term insurance for 10, 15, 20, and 30 years as well as whole life insurance. If you are looking for Nationwide mortgage protection insurance, you can purchase a term life policy for the amount of your mortgage. Moreover, you can also convert this into a whole life policy before the term expires or before you turn 65. In most cases, you will not need to undergo another medical exam.

Even though you can get the quotes online, you will need to work with a representative on the phone to buy a policy. 

Nationwide also offers optional rider packages, such as waiver of premium and an accelerated death benefit.

Cost: The price of the policy varies, and the cost is based on the age, gender, health conditions, occupation, and smoking and drinking habits of the policyholder. A sample quote for a 33-year-old healthy woman who bought term life insurance for 15 years with $500,000 coverage is $16 per month. 

Financial Strength: The company holds an A+ financial strength rating for AM Best. In JD Power’s 2020 US Life Insurance Study, Nationwide ranked third for its Individual Life products.

PROS:
  • The various term life, variable life, and whole life insurance policies
  • Possibility to convert term coverage to a whole life insurance policy
  • Online quotes available
CONS:
  • Coverage purchase via policy advisors
  • Quotes not available for a 15-year term policy

Banner Life insurance company is a preferred option for term coverage for young parents with financial concerns like home loans. Banner Life insurance can provide up to 40 years of mortgage protection with its term policies, which is more than any other insurance company highlighted in this guide.

The insurance company offers as much as $10 million in life insurance coverage for a maximum of 40 years, with an option to supplement it with a 20-year term that can provide another level of protection to your family until your children grow up or the mortgage on your house is paid off. This can take care of your shorter as well as longer term financial issues.

Banner Life insurance offers both term and universal term policies but does not provide whole life policies. It is possible to convert term policies to permanent policies. Moreover, the company provides rider packages like coverage for children, an accelerated death benefit, and a waiver of premium. People can also qualify even if they have pre-existing conditions, a family history of cancer, and use tobacco.

Quotes for term policies are available online, but you will need to work with an agent to buy a policy.

Cost: A healthy 33-year-old woman who takes out a 30-year-term policy with $500,000 coverage will have to pay a premium of $27 per month. In addition, Banner Life insurance company will also charge a $60 annual policy fee.

PROS:
  • Term policies for up to 40 years
  • Up to $10 million in coverage
  • Supplemental 20-year policy
  • Preferred underwriting for applicants with a history of tobacco use and certain medical conditions
CONS:
  • Coverage available through an agent
  • Extra $60 annual policy fee charge

With Protective Life insurance, mortgage protection is easy, particularly for senior citizens. The insurance provider makes it simple for older applicants to buy term protection with beneficial features at an affordable cost, which can be used for a reverse mortgage.

With Protective Life insurance, you need to be at least 62 years of age to take out a reverse mortgage. Typically, if you are an older citizen looking for a life insurance policy as a mortgage protection tool, it can be very cost-prohibitive. However, it’s not like that with Protective.

Coverage amount starts from $100,000 and goes up to $50 million. Term policies are offered in various ranges, from 10 to 40 years. Hence, no matter how big your reverse mortgage is, Protective can help you cover it.

Applicants younger than 66 years can also apply for a 20-year term life insurance policy. You can look for quotes and apply for the policy online; however, you will need to talk to an agent on the phone to confirm coverage. You will also need to go through a medical exam to be deemed eligible for a policy.

Protective term policies can be converted to permanent policies without another medical exam. In addition, a major benefit of Protective is that it offers an accelerated death benefit and coverage for terminal illness at no extra cost. A child rider package with a coverage amount of up to $20,000 is also available.

Cost: Protective provides some of the most affordable life insurance and mortgage protection for senior citizens. A 62-year-old woman can buy a 15-year term policy with a coverage amount of $300,000 for $91 per month, which is cheaper than other similar policies from other insurers.

Financial Strength: Protective has an A+ (Excellent) rating from AM Best, signifying it can easily meet its obligations.

PROS:
  • Easy reverse mortgage for senior citizens
  • A 20-year term policy available for applicants below 66
  • Term insurance convertible to a permanent life insurance policy
  • Accelerated death benefit and terminal illness coverage at no extra cost
  • Affordable premiums for seniors
CONS:
  • Policy confirmation by an agent through a phone call required
  • Medical exam required

Mutual of Omaha mortgage protection insurance allows seniors as old as 85 years to choose from various term and permanent life insurance policies for mortgage coverage. The company also offers a guaranteed whole life insurance policy for people between the ages of 45 and 85 in most states, with the exception of New York, where the age range is between 50 and 75. 

It’s also possible to apply for a term life insurance policy up to 80 years with no increase in premiums, which is why it is one of the most preferred choices for seniors.

If you’re in good health, a term life insurance policy is the most affordable insurance plan for Mutual of Omaha mortgage protection. You can get coverage of up to $25,000 without a medical exam and a health questionnaire. You can find quotes for monthly premiums online, but an agent will need to call you to verify the purchase of the policy.

In case you want a higher coverage amount, you can also apply for a whole life policy with simplified underwriting, which has limited questions about health and a shorter application process. With this insurance policy, you can get a level benefit plan with coverage amount up to $40,000 for people aged between 45 and 85 or a graded benefit plan with coverage amount up to $20,000 for people aged between 45 and 85 in most states.

Cost: A 35-year-old healthy woman who wants coverage amount of $250,000 will have to pay $13.12 per month.

Financial Strength: An A+ financial rating from AM Best.

PROS:
  • Great life insurance policy options for mortgage protection for senior citizens
  • Applicants up to the age of 85 may be considered
  • No medical exam or health questionnaire for some policies
CONS:
  • Policy confirmation by an agent through a phone call required
  • Low limits for the whole life policies for seniors at $40,000 or less

Do I Need Mortgage Protection Insurance?

Home mortgage protection insurance is not absolutely needed. It is an optional insurance policy that you can purchase from certain life insurance companies and banks. Since this policy is quite inflexible, it is not an ideal option because the beneficiaries do not get any money to spend on pressing financial needs. Because of this, nowadays, it is more common to get term life insurance that has a payout that goes directly to the family member rather than the lender.

With a term life insurance policy, your beneficiaries have the option to:

  • Pay off the remaining balance on the house and use the rest of the cash for other things.
  • Skip paying the mortgage, allowing foreclosure of the property, and spend the money on other financial needs.

With a term insurance policy, you get a more affordable premium as well. 

However, mortgage protection insurance can be a good option for people with pre-existing health concerns and disabilities who want the convenience of an insurance policy without a medical exam.

Mortgage protection is also a good supplemental policy to life insurance. For instance, after the death of a loved one, mortgage protection insurance will pay off the mortgage of your house and let your family reap the benefits of the full payout of the other life insurance policy.

MPI, PMI, and MIP: Differences Explained

Although these acronyms all have the same three letters, they have marked differences between them.

MPI

MPI is mortgage protection insurance designed to help loved ones continue making mortgage payments even after the policyholder dies. The premium costs vary and depend on multiple factors like the amount of mortgage, your health, and your age. MPI covers only the principal amount and the interest part of the mortgage payment. Usually, additional fees like property taxes, homeowners’ insurance, and other HOA fees would still need to be paid separately. However, some mortgage protection insurance providers also offer rider packages to cover these miscellaneous expenses.

PMI

MPI is often confused with another type of insurance, the PMI — private mortgage insurance. This type of mortgage insurance is taken out by homeowners to protect the lender who provided the loan for your mortgage. It is usually required if the borrower is unable to pay a down payment of 20%. If the borrower passes away unexpectedly, PMI will give the payout to the lender. However, it will not pay off the mortgage on your home.

MIP

Aside from these two types of insurance, there is also MIP — mortgage insurance premium. This premium is paid by homeowners who have applied for Federal Housing Administration (FHA) loans. However, if the borrower is unable to make a down payment of at least 10%, they will have to pay MIP for the life of the loan.

Benefits of Using Mortgage Protection Insurance

Your property is one of your most essential and expensive assets, and mortgage protection insurance can provide it with a layer of safety. Homeowners can reap several benefits through mortgage protection insurance.

Earmarked Money for Mortgage

A mortgage is perhaps the biggest debt that a person can accrue. With mortgage protection insurance, the money will go straight to the lender, and the ownership of the home will be guaranteed to the beneficiaries. 

Guaranteed Acceptance

Usually, MPI policies are issued on a guaranteed acceptance basis and do not require a medical exam. People with health issues or disabilities could really take advantage of this opportunity. But since health is a factor in determining premiums, such individuals would need to pay very high rates, or they would not be eligible for a life insurance policy at all. On the other hand, MPI policies do not have an underwriting process, so the premiums are not as high.

Mortgage Protection Insurance During Unemployment

We are living during times of economic uncertainty. If you suddenly find yourself unemployed, this insurance can be very beneficial.

Cons of MPI

Mortgage protection insurance has quite a narrow scope. It may be able to cover your mortgage expenses, but it may do so at the cost of other immediate financial needs.

More Cash Out of Pocket

The premium paid for the MPI is an added expense for you, particularly if you already have a life insurance policy. Hence, most people consider MPI as an optional insurance policy.

Limited Benefits in Some Cases

If you have almost paid out your mortgage, then getting MPI may not be worth your while. It’s better to save that money for retirement or an emergency fund.

Decreasing Death Benefit

The policy also has a declining payout. It means that with time, you will be paying the same amount of premium, but you’ll be getting less and less coverage as the mortgage pays itself off.

Lack of Flexibility

Although the death benefit can take the financial burden off your family, they may still be left with other expenses that they cannot afford, including medical bills and college tuition.

High Price

Mortgage protection insurance is more expensive than a traditional life insurance policy for a person who is in good health. Typically, the premium may be double that of a term life insurance plan.

How Much Does Mortgage Protection Insurance Usually Cost?

The cost of mortgage protection insurance varies and depends on such factors as:

  • Your age
  • Your occupation
  • Geographical location
  • Policy coverage and duration

In most cases, the younger you are and the smaller the policy coverage, the less you will have to pay.

Mortgage protection insurance providers may charge you premiums as low as $5.5 per month for policies between $50,000 and $350,000. However, premiums can also be as high as $75 per month.

Moreover, the average cost of mortgage protection insurance is often twice higher than a traditional term life policy.

Is It Worth Getting Mortgage Protection Insurance?

If you have frequent health issues or you are a senior citizen, it can be difficult to get a good life insurance policy at affordable rates. That’s when mortgage protection insurance can be your best and even only option. To find the right policy that matches your needs, you should research the best mortgage protection insurance companies. 

However, before you do that, you must look at traditional term life insurance policies first. A term life policy can provide you more bang for your buck than MPI. It can offer you more flexibility by allowing you to choose your policy length and the coverage amount. It may also be cheaper than mortgage protection insurance. Therefore, it is worth comparing term life insurance and mortgage protection insurance quotes to see which of them is the best value for your money.

FAQs

Is mortgage protection the same as life insurance?

Mortgage protection insurance and life insurance policies have several differences. Mortgage protection insurance is designed specifically to pay off the mortgage in case of the policyholder’s death. The payout is sent directly to the lender rather than the beneficiaries. In addition, since your mortgage will decrease over time, the death benefit will also decrease, but the premiums will stay the same.

By contrast, a life insurance policy is designed to provide financial independence to your beneficiaries. Since the death benefit goes directly to the beneficiaries, they can use it to pay various expenses, including mortgage payments. Hence, a life insurance policy is more flexible, offering financial freedom to the beneficiaries.

What is mortgage protection insurance, and how does it work?

Mortgage protection insurance is a kind of insurance policy that pays off your mortgage in case of your death. Unlike life insurance, the beneficiary here is the lender. Therefore, the lender receives all the payout. 

Should I take out mortgage protection insurance?

It really depends on your circumstances. Since mortgage protection insurance can be used only to pay off the mortgage, most people prefer a traditional life insurance policy that offers them more flexibility to use the death benefit as they wish.

However, suppose you cannot buy a term life insurance policy because of age or health issues. In that case, mortgage protection insurance can at least provide you coverage to pay off the balance on your home in case of your death.