Should I buy mortgage protection insurance?
Mortgage protection compared with a plain term policy: who gets the money, whether the benefit shrinks, and when each one makes sense.
- Mortgage protection insurance is a real product, and it is usually the more expensive way to solve the problem.
- A level term policy of 200,000 dollars pays your family the whole 200,000 even after the loan balance drops to 90,000, and they decide what to do with it.
- If you cannot qualify medically for a fully underwritten policy, some mortgage protection products use simplified underwriting, which asks fewer health questions, and will issue when others decline.
Maybe, but compare it against a plain term policy first. Mortgage protection is real life insurance, and it is usually the more expensive way to solve the problem. A level term policy for the same amount pays your family in cash, and they decide how to spend it.
After you close on a house, the letters start arriving. They use your lender's name and the exact loan amount, and they offer mortgage protection insurance.
What mortgage protection is
It is life insurance. The death benefit, the money the policy pays when you die, is usually designed to pay off the loan.
Some versions are decreasing term, which means the policy runs for a set number of years and the benefit shrinks as the loan balance drops. Some pay the lender directly rather than your family.
What a plain term policy does instead
Level term means the death benefit stays the same the whole time. It pays your beneficiary, the person you name to receive the money, and that person decides how to spend it.
Say the mortgage balance has dropped to 90,000 dollars and the policy is 200,000. Your family receives the full 200,000. They can pay the house off and keep the rest for childcare, tuition or the income you were providing.
Level term is usually priced similarly or better for a healthy applicant, and it covers more than one obligation.
How to size it
- Take the mortgage balance.
- Add other debts and final expenses.
- Add the years of income your household needs.
- Subtract coverage you already have.
That total is the policy. The mortgage is one line in it, not the whole calculation. Our coverage worksheet walks through it.
When mortgage protection makes sense
Two cases. The first is health. Underwriting means the company reviews your health history and can turn you down. If you cannot qualify medically for a fully underwritten policy, some mortgage protection products use simplified underwriting, which asks fewer health questions, and will issue when others decline.
The second is you. If the structure itself, with the benefit tied to the loan, is what finally gets you to buy coverage at all, coverage you own beats coverage you kept meaning to buy.
Read before you sign
- Is the benefit level or decreasing?
- Who is the beneficiary, your family or the lender?
- Does the premium, the bill you pay for the coverage, stay the same for the whole term?
- Is it convertible, meaning you can trade it for a permanent policy later without a new health review?
Compare both before you decide
Bring the letter you received. We will quote the same coverage as level term, and you can see the two side by side. Call our McAllen office at (956) 687 3334, or use the ZIP form on this page. Se habla español.
Common follow-up questions
Is mortgage protection required by my lender?
No. Lenders require homeowners insurance, and often flood insurance in parts of South Texas. Life insurance on the borrower is optional and is your choice.
What about the coverage offered through my mortgage servicer?
Same analysis. Compare it against a level term policy for the same amount, and check whether the benefit decreases.
Does the policy pay off the house automatically?
Only if it is written to pay the lender. A standard term policy pays your beneficiary, who then decides. Most families prefer that control.
How much should it pay?
The death benefit is what your family receives. Most final expense policies here run between $5,000 and $25,000.
What kind of coverage?
Not sure is a fine answer. Your agent will walk you through the difference.
Male or female?
Rates are set separately for each, so this one changes the number.
When were you born?
Age is the single biggest thing that moves a final expense premium.
Any nicotine in the last year?
Cigarettes, cigars, chew or vape. Answering honestly keeps the quote accurate.
Who are we quoting?
So your agent knows who they are calling.
Where should we call you?
One call with your prices. No robocalls, no list selling.
Want a copy by email?
Optional. It means you have the numbers in writing after the call.
By pressing “Get my quote” you agree a licensed McAllen Insurance Group agent may contact you by phone, text or email at the details you provide, including by automated dialing. Consent is not required to buy. This is a request for a quote, not an application, and not an offer of coverage.
Getting your request to an agent
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An agent will call you with the prices. If you would rather not wait, call us now.
Call (956) 687 3334Monday to Friday, 9 AM to 6 PM. Se habla español.
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Gerino Alejos
Licensed insurance agent · License 3128710 · NPN 18243381
Owner of McAllen Insurance Group, an independent agency on North 10th Street in McAllen. Works with clients across Hidalgo, Cameron and Starr counties on Medicare, Marketplace health, life and auto coverage. Se habla español.