What Is Mortgage Protection Insurance? Definition

Why it matters

Most mortgage protection is sold as term life insurance, sometimes with living benefit options. The death benefit goes to the named beneficiary, who can pay the mortgage or use the money for other needs. Some lender products pay the bank directly and decline as the loan balance falls. Families should compare mortgage protection with ordinary term life. Ask who the beneficiary is, how long coverage lasts, and what health questions apply. Prices and underwriting vary by carrier.

Source: iii.org

Where we use this term

Mortgage protection vs term life vs PMI: who does each one protect?

Related terms

Term Life Insurance: Term life insurance is coverage that lasts for a fixed period, such as 10, 20, or 30 years. It pays a death benefit only if the insured dies during that term. It usually builds no cash value.
Decreasing Term: Decreasing term is term life insurance whose death benefit falls over the policy term, often on a set schedule. Premiums usually stay level while the amount of coverage shrinks.
Beneficiary: A beneficiary is the person or organization the policy owner names to receive the death benefit when the insured person dies. A policy can name one or several beneficiaries and can split the payout by percentage.
Death Benefit: A death benefit is the money a life insurance carrier pays to the beneficiary when the insured dies. It is usually paid as a lump sum and is generally income tax free to the beneficiary.
Needs Analysis: A needs analysis is a review of a family's finances to find how much life insurance is needed. It looks at debts, income, expenses, assets, and goals.

All 241 terms

Why it matters

Where we use this term

Talk to a licensed agent.