Where to Buy Mortgage Protection Insurance, and How to Check Who You're Buying From

Short answer: New York’s Department of Financial Services (DFS) says decreasing term life policies are often sold as mortgage protection. The Texas Department of Insurance (TDI) says you can buy life insurance from an insurance company, agent, or broker. Lenders may also offer credit life, which pays the loan balance, and some employers offer group life. Where you buy affects how many companies you can compare and who receives the money.

Who sells mortgage protection insurance?

TDI says, “You can buy life insurance from an insurance company, agent, or broker.” The National Association of Insurance Commissioners (NAIC) adds, “You can apply for life insurance through life insurance agents, the mail, and online.”

DFS describes decreasing term life, where “the face amount reduces over the period,” and says, “Often such policies are sold as mortgage protection.” It says that if the insured dies, the proceeds “can be used to pay off the mortgage.” Ask any seller whether the policy you’re offered is decreasing term, level term or something else. If you’re new to the product, start with what mortgage protection insurance is and how it differs from PMI.

Who sells mortgage insurance like PMI?

PMI is a different product. The Consumer Financial Protection Bureau (CFPB) says “PMI is arranged by the lender and provided by private insurance companies,” and that “PMI protects the lender—not you—if you stop making payments on your loan.” The CFPB also says “FHA mortgage insurance is required for all FHA loans” and that “mortgage insurance, no matter what kind, protects the lender – not you – in the event that you fall behind on your payments.”

If you see “mortgage insurance companies” in search results, check whether a page means mortgage insurance that protects the lender or life insurance that pays a beneficiary.

What are the main places to buy mortgage protection?

Details vary by insurance company and state, so read the actual policy terms.

Should I buy from an independent agent or a captive agent?

The NAIC says, “An independent agent may sell policies from many different companies,” and “A captive agent sells insurance for only one company.” It adds, “If you’re using an independent agent, you’ll have choices of companies and coverages,” and that both kinds of agents “represent insurance companies and receive a commission from the insurance company.”

That matters because, as TDI notes, “Rates vary by company.” TDI’s shopping advice is to “Get quotes from several companies” and to “Compare ‘apples to apples.’” Ask for quotes on the same coverage amount, term and features. If you work with a captive agent or buy direct, you may need to collect other quotes on your own.

Can I buy mortgage protection directly from an insurance company?

The NAIC says you can apply for life insurance “through life insurance agents, the mail, and online.” If you buy direct, ask the company whether the coverage is level or decreasing, which riders are included, and whether the term length matches the years left on your loan.

What about mortgage life insurance from my lender or bank?

Coverage offered through a lender may be credit life. DFS says credit life is “usually sold on a group basis to a creditor” and “generally pays the outstanding balance of the debt at the time of the borrower’s death.” TDI says, “Credit life pays the balance of a loan if you die before the loan is paid off.” DFS says some people buy group credit life “in spite of its higher cost because of its convenience and its availability.”

TDI also says, “If you already have life insurance, you might not need credit life.” As another option, TDI says “you can assign some of the death benefits to the lender to pay the loan balance.” For a side-by-side look, see mortgage protection vs. term life and credit life.

Is life insurance through work enough?

TDI says a basic group policy “usually has a death benefit equal to one or two times your annual salary.” The NAIC says the “death benefit usually is less than you need” and that if you leave the employer, “you may not be able to take this coverage with you.” TDI says, “If you get life insurance through your employer, coverage typically ends when you leave your job.”

Compare your group death benefit with your loan balance, and ask your benefits office what happens to the coverage if you leave.

How do I check an agent’s or insurance company’s license?

Do this before you share health or bank details. TDI’s first shopping tip is: “Make sure the agent and company are licensed to sell insurance.”

• Agents. The NAIC calls its Insurance Agent Search “a free service for consumers to find out if a person is licensed to sell insurance.” It says, “Consumers must have the first name, last name, city, and state of the individual being searched,” and “The search results will provide immediate verification on whether the person is licensed in your state…”
• Insurance companies. The NAIC says, “You can check company licensing information through the NAIC’s Consumer Information Source (CIS) or by calling your state insurance department.” TDI warns, “If you buy from an unlicensed company, your beneficiary might not get paid if the company fails.” The NAIC’s Insurance Departments page lets you “find contact information for insurance departments.”

The NAIC also suggests that while you’re checking licenses, you “check to see if they’ve had complaints filed against them.” If a “mortgage protection” letter arrives, look for the name of the company or agent that actually sent it and check their license before you respond.

What is the free-look period?

It’s a window after your policy arrives when you can change your mind. The NAIC says you can “return it for a full refund within a certain period, usually 10 days after you receive it,” and that “the review period usually is stated on the first page of the policy.” TDI says “Texas policies have a free-look period of at least 10 to 20 days.”

The NAIC also advises, “Don’t cancel your current policy until you get the new one.”

Checklist: what to ask before you buy

1. Is the agent licensed in my state? Look them up before the appointment.
2. Is the insurance company licensed in my state? Check the NAIC’s CIS or call your state insurance department.
3. How many insurance companies can you quote? That tells you whether the agent is independent or captive.
4. Who gets the money? Me, my named beneficiary, or the lender?
5. Is the death benefit level or decreasing? If it decreases, on what schedule?
6. Does the term length match the years left on my loan? Not the original 30, if you’ve been paying for a while.
7. Is there a medical exam? TDI says underwriting “often includes passing a medical exam and answering questions about your health, job, and habits.” Ask what this policy requires.
8. What riders are included, and what do they cost? TDI says an accelerated death benefit option “prepays some or all of the death benefit while you’re still living.” See how living benefits work on mortgage protection.
9. Is the premium locked for the whole term? TDI says term premiums stay the same for the term and go up if you renew. Ask what renewal would cost.
10. How long is my free-look period? Write the date down when the policy arrives.

The Connecticut Insurance Department lists factors that affect life insurance premiums, including your age when you buy, your health and health habits such as smoking. For more on cost, see how much mortgage life insurance costs per month.

A licensed agent can go over policies for your loan balance, age and state. Here’s how calling RestAssured works.

RestAssured is not a lender, an insurance company or an insurance agency, and isn’t affiliated with any mortgage lender, servicer or government agency. RestAssured connects callers with independently licensed insurance agents.

Frequently asked questions

Who sells mortgage protection insurance?

NY DFS says decreasing term life policies are often sold as mortgage protection. The Texas Department of Insurance says you can buy life insurance from an insurance company, agent, or broker, and the NAIC says to make sure the agent and insurance company are licensed in your state.

Who sells mortgage insurance like PMI?

The CFPB says PMI is arranged by the lender and provided by private insurance companies, and that PMI protects the lender, not you, if you stop making payments on your loan.

Is it better to buy mortgage protection from an agent or my lender?

Compare who receives the money. NY DFS says credit life generally pays the outstanding balance of the debt at the time of the borrower’s death, while a term policy pays its face amount to your beneficiary if you die during the term. TDI says that if you already have life insurance, you might not need credit life.

How do I check if a mortgage protection agent is licensed?

Use the NAIC’s free Insurance Agent Search, which needs the agent’s first and last name, city and state, or call your state insurance department.

Can I cancel mortgage protection insurance after I buy it?

During the free-look period you can return a new policy for a full refund. The NAIC says it is usually 10 days after you receive the policy and is usually stated on the first page of the policy; Texas policies allow at least 10 to 20 days.

Sources

• How to Choose an Insurance Agent, National Association of Insurance Commissioners (2019)
• Insurance Agent/Broker Search, National Association of Insurance Commissioners
• Insurance Departments, National Association of Insurance Commissioners
• Life insurance guide, Texas Department of Insurance
• Life Insurance Buyer's Guide, National Association of Insurance Commissioners
• Types of life insurance policies, New York State Department of Financial Services
• What is private mortgage insurance?, Consumer Financial Protection Bureau
• What is mortgage insurance and how does it work?, Consumer Financial Protection Bureau
• Life and annuity insurance: what affects premium, Connecticut Insurance Department

This article is for general education. Policy features, prices and eligibility vary by insurance company and state; your agent will explain the specific terms of any policy before you apply.