What Is Mortgage Protection?

Mortgage protection insurance will provide the funds to pay off a mortgage in the event of a spouse's death.
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If you're considering the purchase of a home, your biggest fear, besides discovering that the home was built on an ancient sacred burial ground, may be that you might pass away and leave your partner saddled with a hefty mortgage payment. Of course, your partner could always sell the home, but that might be something that neither of you wish to consider. Another alternative is to purchase a form of life insurance known as mortgage protection insurance.


Mortgage protection insurance is essentially life insurance that provides funds to your spouse or partner in the event you die before the mortgage is paid off. It is typically purchased at the time you settle on your home, or in some cases, you can buy it up to 24 months after closing. This gives you the peace of mind of knowing that your partner can stay in the home even if your income is no longer available.


According to Insure.com, mortgage protection insurance has evolved over time. In your parents' time, policies typically were structured so that the death benefit (the amount of money your partner receives when you die) would decrease to coincide with the decrease in your mortgage balance over the years. However, policies are now available where the death benefit remains the same for the life of the policy. This feature may reduce your need to purchase supplemental life insurance.


In these modern times where both partners typically earn income, it can be equally important to take precautions in the event that either partner dies prematurely. Mortgage protection polices are available that provide coverage if either partner dies. Also, it's important to note that even if you decide to refinance your mortgage at some point in the future, you probably won't have to purchase a new mortgage protection policy.

Other Uses

In some cases, there may be better ways to use the insurance proceeds than to pay off the mortgage right away. For example, if the surviving partner can afford to continue making the mortgage payment, a better option could be to invest the money so that it can earn interest over time. Things to consider include the current interest rates, the partner's overall financial health and whether she wishes to stay in the home for the duration of the mortgage.

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