What Is Mortgage Protection Insurance?

Mortgage insurance might seem simple at first glance: if you pass away and have mortgage protection insurance, your property is in the clear and your beneficiaries do not have to worry about making payments or selling the property.

However, the beneficiary of mortgage protection insurance is the lender. While the policy will pay off the mortgage, your family will not have any say in how the money is spent. This type of insurance is not required, so make sure that you weigh the benefits and drawbacks before committing to mortgage protection insurance.
If you have a decent life insurance policy, are in good health, and do not work a high-risk job, you might not need MPI. On the other hand, if you are concerned about keeping your family in your home after your death, or if you do not qualify for life insurance because of an illness or high-risk job, mortgage protection insurance can be a great option.
Mortgage Protection Insurance vs. PMI

Many people are often confused about the differences between mortgage protection insurance and other forms of mortgage insurance like private mortgage insurance, or PMI. After all, they have a very similar acronym - PMI and MPI - and are both forms of mortgage insurance. Private mortgage insurance is a type of insurance that is required if you have a conventional loan on your home with less than 20% down. This monthly fee is added to your mortgage payment as a way of insuring your lender in case you default on your loan.
PMI and other forms of mortgage insurance like FHA mortgage insurance do not have anything to do with what happens to your home after death, and they do not protect you, they protect your lender. Make sure to talk to your lender and real estate agent about the different types of insurance options you have!