Mortgage Life Insurance Vs. Mortgage Payment Protection

Do you ever get the feeling when there are so many options and so many different things from which to choose that it’s hard to make sense of what is what? I tend to get that feeling when it comes to looking at different kinds of insurance, as many different providers offer the same kind of cover but give it a different name e.g. life insurance vs. life assurance. However, sometimes the subtle change of name means that you’re being offered a completely different product. In the case of mortgage life insurance vs. mortgage payment protection (MPPI), it pays to understand the difference and to know just what you’re getting.

Mortgage life insurance

Mortgage life insurance is a policy that you take out in order to help towards any outstanding mortgage payments in the event of your death. Whereas other life insurance policies are used to cover other outstanding debts, help towards funeral costs or to provide a legacy for their families, this form of life insurance is specifically designed to help pay off your mortgage. This means that your dependants won’t have to worry about making repayments after you’re gone, and it offer them a more secure home.

Mortgage life insurance is a form of decreasing term life insurance, meaning that the amount of cover decreases as time goes on. This is because, as you make repayments on your mortgage each month, the overall outstanding amount goes down and so the amount you’d need from the policy to pay off the debt decreases accordingly. This is usually a cheaper option compared to other life insurance policies.

Mortgage payment protection

The key difference between MPPI and mortgage life insurance is that MPPI covers you while you’re still alive. MPPI covers your payments in the event that you are unable to pay your mortgage due to illness or an accident (or in the case of some policies, with unemployment also). This gives you between 12 and 24 months’ worth of mortgage payments while you recuperate and get back on your feet. There’s usually an exclusion period of about 60 days from the start of the policy where you can’t claim for unemployment, but can still claim for sickness and accidents.

MPPI is useful if you think that you wouldn’t be able to make your mortgage payments were you to be without your monthly income. This protection only covers your interest payments, however, so it won’t reduce the overall size of your mortgage.
Which of the two you decide to use really depends on your circumstances. Mortgage life insurance is more of a long term investment, whereas MPPI gives you a temporary stop-gap if there are any unforeseen circumstances. Either way, you’ll be able to ensure that you and your family are protected and that your mortgage is one less thing to worry about.

This guest post was written by Jamie Gibbs, the resident blogger on behalf of – For additional information on mortgage life insurance and mortgage payment protection see the website for more details.

Leave a Reply