If you’re responsible for housing costs for your loved ones, you may wonder how to cover them if you need to plan during a long-term illness or if you die suddenly. Mortgage Protection Insurance (MPI) helps homeowners, coop, and condo owners repay their home loans if they can no longer meet monthly payments. It is a type of life or disability insurance that pays the outstanding balance if the mortgage holder dies or has a severe disability that prevents them from working and earning income.

How does Mortgage Protection help you?

An MPI policy will cover the interest and principal costs of a mortgage. It excludes homeowner’s fees – property taxes, home and contents insurance, and HOA dues. You may be able to buy a rider to cover the expenses. You can purchase a mortgage protection policy within two years of closing a loan, and some providers extend the period to 5 or 10 years. Once you reach the end of the term, your coverage ends.

You make premium payments throughout the policy term, which lasts for the same years as your mortgage. Insurance agencies affiliated with mortgage lenders and other independent insurance companies obtain public records to sell MPIs.

The death benefits get paid to the mortgage lender if you die during your coverage term. Your beneficiaries will not receive proceeds directly. The policy pays the mortgage in total, so they can rest easy and not have to make house payments.