Mortagatge Protection Insurance (MPI)

• Mortgage protection insurance (MPI), also known as mortgage life insurance, is a type of insurance policy designed to pay off your mortgage balance if you die before it’s fully repaid. 

Key Features:

• Purpose: MPI pays your lender the remaining mortgage amount if you pass away, ensuring your family can keep the home without assuming the debt.​
• Beneficiary: Unlike a standard life insurance policy that pays your loved ones directly, the payout from MPI goes to your mortgage lender.​
• Coverage options: Some policies also include additional benefits—such as coverage for disability, critical illness, or job loss—that help with mortgage payments in those situations.​
• Payment structure: Coverage decreases over time as you pay down the loan, but your premiums often remain the same throughout the policy term.

Advantages and Drawbacks:

• Advantages: Easy approval (no medical exams), peace of mind, and structured coverage matching your mortgage amount.​
• Drawbacks: Decreasing coverage, fixed premiums, and less flexibility compared to term life insurance, which can be used for multiple financial needs—not just your mortgage.​

In short, mortgage protection insurance is a helpful but narrow financial safeguard—it ensures your home is paid off if you die or are unable to work, but it’s generally more limited and costly than standard life insurance options.

Suppose you are 40 years old with a $300,000, 30-year mortgage.

• The average MPI premium for a healthy, non-smoking male of that age might be $17–$30 per month for $300,000 coverage over 10 years.​

• Over 30 years, assuming premiums remained $25/month, total cost = 25×12×30=$9,00025×12×30=$9,000.
  If you were to die in year 15 with $180,000 still owed, the insurer would pay that amount directly to the lender, so your family keeps the home.e

What is Mortgage Protection Insurance?

https://www.experian.com/blogs/ask-experian/what-is-mortgage-protection-insurance/