Unlike Private Mortgage Insurance, or PMI (which protects your lender), mortgage life insurance provides a death benefit that can be used by your beneficiaries to pay off the remaining balance of your mortgage.

In most instances, people buying mortgage life insurance get a regular term life insurance policy or a universal life insurance policy that accumulates cash value (which could allow you to pay off your mortgage 10 to 15 years early).

Either way, the policy you choose can be used solely as mortgage payoff insurance – to pay off your mortgage – or it can be coupled with other needs such as income replacement to provide fuller financial protection for your loved ones.

Learn about cash out refinancing: Cash Out Refinance: How to know if it's time

Benefits of Mortgage Life Insurance

You own the policy: The policy is yours which means you and your beneficiaries decide how benefits are paid.

You choose the amount of coverage: With many coverage options available, you can select the amount that fits your needs. And no matter what amount you choose, it won't change as long as you hold your policy. So even as you pay off your mortgage over time, your insurance benefit stays the same.

Moving your mortgage doesn't impact your insurance: Your coverage is not affected by your mortgage at all. Until you cancel your coverage or a benefit is paid, your mortgage life insurance coverage is in place to protect you.

And you can keep your coverage after your mortgage is paid: Your coverage is not affected by your mortgage at all. Until you cancel your coverage or a benefit is paid, your mortgage life insurance coverage is in place to protect you.

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