Life insurance is an important financial product that can protect your family if something were to happen to you. One of the biggest considerations when buying life insurance—and calculating how much coverage you need—is your mortgage.
Mortgage insurance is a term policy that provides declining coverage as your mortgage value declines over time. While mortgage protection insurance products were available not that long ago, they have been steadily phased out by carriers because most people don’t stay in the same home for 30 years or they refinance at some point in time. These days, it makes more sense to instead purchase term life insurance that can protect your family in your absence, to include paying off the mortgage balance on your home.
Here are our top picks for the best term life mortgage protection insurance companies, taking into account factors such as product availability, consumer satisfaction, pricing, and features.
The Best Mortgage Protection Insurance Companies of 2021
- Best for Young Families: Banner Life
- Best for Veterans: USAA
- Best for 30-Year Mortgages: State Farm
- Best for 15-Year Mortgages: Nationwide
- Best for Reverse Mortgages: Protective
Best for Young Families : Banner Life
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Banner Life
For young families—with financial concerns that include new home loans, small kids, and even future babies—term coverage through Banner Life can provide up to 40 years of reliable mortgage protection, earning our nod for this category.
Term policies last as long as 40 years
Available in almost every state
Up to $10 million in coverage offered
Supplemental terms up to 20 years
Preferred underwriting available even with medical or tobacco history
Must buy coverage through an agent
Annual policy fee added
The needs of younger families are different than those of older families which could include households that are still growing and new home purchases. Both of these can affect the level of mortgage protection you and your loved ones need.
For young families, Banner Life is our top pick for protecting not only your partner and children but also the mortgage on your family home for the duration of the loan even if you refinance or upgrade properties. The carrier offers as much as $10 million in life insurance coverage for up to a 40-year term, with the option to add a supplemental 20-year term that can further protect your family until the kids are grown or the house is paid off. This allows you to account for both shorter- and longer-term financial concerns with one policy.
Banner Life provides both term and universal life policies, but no whole life coverage. Term-to-permanent conversion is offered, as are riders like waiver of premium, accelerated death benefit, and coverage for children. Applicants can qualify for preferred underwriting even with a history of tobacco use, certain medical issues, or a family history of cancer.
This carrier is backed by Legal & General, which has 180+ years of experience and holds an A+ (Superior) rating from AM Best. Policies are available in 49 states and the District of Columbia, though coverage is not offered in New York.
You can get term quotes online but will need to work with an agent to actually buy your policy. We found that a healthy 33-year-old woman in Virginia could protect her family’s mortgage with $500,000 in 30-year term coverage for just over $27 a month. Also, be sure to note that a $60 annual policy fee will be added to your cost.
Read our full Banner Life Insurance review.
Best for Veterans : USAA
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USAA
Eligible military veterans and their families can purchase life insurance from USAA, a top-rated carrier that offers a wide variety of coverage options and protections that can be purchased online or through their mobile app.
Term, whole, and universal life coverage
Retiring veterans can replace SGLI and lock in premiums
Many terms and riders to choose from
Available in all 50 states
Add or convert coverage as needed
Medical exam is required
Only available to eligible servicemembers and their families
Whether you’re a military family or veteran, USAA is the clear winner for life insurance coverage that can help protect your mortgage for your loved ones. This military-based company has been providing a range of financial services and products since 1922—including banking, loans, and credit cards—but also offers top-rated life insurance coverage for short- and long-term needs.
In order to buy life insurance from USAA, you’ll need to become a member; eligibility is extended to past or present servicemembers, their spouses, and their children. The carrier offers term, whole, and universal life policies, all of which provide benefits when deploying or retiring from service (such as locking in premiums to replace SGLI benefits).
Term policies are 10, 15, 20, 25, and 30 years in length and can be converted to permanent coverage later on. Riders include coverage for your children and/or spouse, severe injuries during military service, and accelerated death benefits.
You can also add more coverage after certain life events, such as having a baby, getting married, or buying a home. This means that if you move and purchase a more expensive home, you can ramp up your life insurance coverage to protect that larger mortgage.
Online quotes are available, either online or through the company’s mobile app. We were quoted $30 a month for a $500,000, 30-year term policy on a healthy 33-year-old woman. In order to buy a policy, though, you’ll need to become a member and complete a medical exam.
USAA holds an A++ (Superior) rating from AM Best, which is the highest possible financial strength rating.
Read our full USAA Life Insurance Review.
Best for 30-Year Mortgages : State Farm
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State Farm
Our favorite mortgage protection life insurance carrier for 30-year mortgages is State Farm, which offers to return your decades’ worth of premiums if you don’t wind up needing your policy.
Top consumer ratings
Return of premium offered
Online quotes available
Must buy through agent
Not available in all states
Limited term lengths
Never needing to actually use your life insurance coverage is obviously a good problem to have. If you’ve paid premiums for decades just to have your term policy expire, though, it would still be nice to get a little of that money back in the end.
We chose State Farm as our top mortgage protection life insurance carrier for 30-year mortgages for this exact reason. In addition to whole and universal life coverage, State Farm offers 20- and 30-year term coverage with a cash-back guarantee. The return of premium feature means that you can get back all of the money you paid into your policy if, at the end of your term, you have made scheduled payments on time and not needed to use any of your coverage or benefits.
State Farm policies are available in all states except Massachusetts. While you can get an online quote for term coverage, you’ll need to work with an agent in order to buy your policy; medical exams are required for most applicants.
JD Power ranked State Farm the number one life insurance carrier in their 2020 U.S. Life Insurance Study, which takes into account factors such as consumer satisfaction and customer service. State Farm also holds an A++ (Superior) financial strength rating from AM Best.
A 33-year-old healthy woman can buy $500,000 in 30-year term coverage from State Farm for just under $35 a month, according to the online quote generator. This doesn’t include any optional coverage such as a disability waiver of premium, child or spouse protection, or a select term rider.
Read our full State Farm Life Insurance review.
Best for 15-Year Mortgages : Nationwide
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Nationwide
We picked Nationwide as our favorite carrier for protecting your 15-year mortgage as they offer affordable and reliable protection with term-to-permanent conversion at any time during your policy.
Term, whole, universal, and variable life coverage
Convert to permanent coverage at any time without medical exam
Online quotes available
Need to buy through advisor
Quotes online are limited
Whether you’re looking to buy term, whole life, universal life, or variable life insurance coverage, Nationwide has a product for you. We chose the carrier as our top pick for 15-year mortgage protection because of its term life policy options and features: Policyholders have the ability to convert their coverage to permanent life insurance protection at any time before their term expires (through age 65).
This means that you can buy a lower-cost policy that protects your mortgage, especially if you have a shorter loan term like 15 years. After that period, you can opt to convert your life insurance into a permanent policy that suits your family’s new needs, or you can keep your term coverage until it expires. In many cases, an additional medical exam is not needed to convert.
Online quotes are offered; however, even though temporary coverage is available in 10-, 15-, 20-, and 30-year terms, you can only get pricing for 10, 20, or 30 years (not 15). Also, you’ll need to work with an advisor to actually purchase your policy. Medical exams may be required for some applicants.
A healthy 33-year-old woman can buy $500,000 in term life coverage for 15 years at a rate of about $16 a month through Nationwide. Optional riders include an accelerated death benefit, waiver of premium, and of course, the ability to convert term coverage at any time before your term ends (maximum age of 65).
Nationwide has been providing insurance coverage for more than 90 years and operates across the country. The company holds an A+ financial strength rating from AM Best and ranked third in JD Power’s 2020 U.S. Life Insurance Study.
Best for Reverse Mortgages : Protective
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Protective
Protective gets our top nod for the best mortgage protection insurance for reverse mortgages, because this carrier makes it easier for older applicants to buy the term protection they need at affordable rates and with helpful features.
Apply online for up to 20-year term coverage if you’re 65 and under
Terminal illness and accelerated death benefits at no cost
Convertible to permanent coverage
Additional benefits and riders
Affordable even for older applicants
Must finalize with agent
Medical exam required
In order to take out a reverse mortgage, homeowners need to be at least 62 years of age, among other requirements. This means that if you’re looking to buy life insurance as a mortgage protection tool, you’re probably an older applicant which can really limit the options and pricing available to you.
Protective gets our top nod for the best term life insurance for reverse mortgages, not only because of their competitive rates but also due to the protection and features offered on their policies, even for older applicants. The company has been protecting families for more than 110 years and holds an A+ financial strength rating from AM Best.
Coverage is available from $100,000 all the way up to $50 million with terms ranging from 10 to 40 years in length. No matter how large your reverse mortgage is, you can build the right Protective life insurance policy to match.
Applicants 65 and under can apply online for up to a 20-year term (62 or under if you’re a tobacco user). Though you can get a quote and apply online, just note that you’ll need to finalize the coverage with an agent over the phone. A medical exam will also be required to complete your purchase.
Term policies are convertible to permanent coverage without the need for a new medical exam. Protection like a terminal illness or accelerated death benefit is included at no additional cost. Optional protections include a child rider with up to $20,000 in coverage.
Protective term life policies for older applicants are some of the most affordable we have found. A 62-year-old woman could buy $300,000 in 15-year coverage for only $91 a month, for instance, which is about half as much as we were quoted by some of the other carriers on this list.
Read our full Protective Life Insurance review.
FAQs
What Is Mortgage Protection Insurance?
Mortgage lenders and insurance companies alike once offered a product called mortgage protection insurance. Though the actual features varied, most of these policies were a form of decreasing term insurance, intended to pay off the policyholder’s home mortgage if they were to pass away.
The death benefit on this type of policy was paid out directly to the mortgage lender, bypassing the insured’s family altogether. This coverage also decreased over time in line with the mortgage loan’s amortization, even though premiums were level for the length of the policy.
Today, providers offer term coverage designed to help family members cover the value of the mortgage with other financial needs upon the death of a loved one.
Mortgage Protection Insurance vs. PMI
People often hear mortgage insurance and automatically think of PMI, or private mortgage insurance. However, there are some clear and distinct differences between the old mortgage protection insurance policies and the PMI coverage required on many mortgage loans.
Mortgage protection insurance was an optional coverage meant to pay off the balance of a home loan if the owner passed away. Private mortgage insurance (PMI) is coverage that mortgage lenders may mandate if the borrower does not put up a down payment of at least 20 percent when buying the home. PMI protects the lender, not the borrower, if the debt is not paid as scheduled. It will not pay off the balance of the home even if the borrower passes away unexpectedly.
What Mortgage Protection Insurance Is Today
It’s nearly impossible to find mortgage protection insurance today, at least as a standalone policy. Some life insurance carriers may offer mortgage protection as an optional rider on life insurance policies, but these are very rare.
For the most part, protecting your mortgage is just a primary reason to buy a solid life insurance policy. In fact, carriers will often ask your mortgage balance when helping you calculate how much term or permanent life insurance coverage to buy.
Term life insurance is often cheaper for many homeowners, as well as being significantly more versatile. Rather than paying level premiums for a decreasing benefit—as was offered by mortgage protection insurance policies—term life insurance offers level premiums for a level benefit. Your family will receive the same payout regardless of how much is owed on your home if you die.
Additionally, term life insurance gives your family options. If they want to use the death benefit to pay off the home, they can; if they would rather put that money to use somewhere else, though, that’s also an option. And if you want to refinance your home mortgage over the years (without it messing with your life insurance coverage), you can.
What Are the Expected Costs of Insurance for Mortgage Protection?
There are many factors that go into the cost of life insurance coverage, even if you’re buying it to protect your home mortgage. These include the level of coverage (i.e. the amount you owe on your home), your age, your health, your location, and things like tobacco use or hobbies.
We found that for between $300,000 and $500,000 in term coverage for 30 years, a healthy woman in her early-30s could expect to pay somewhere between $16 and $35 a month.
When Is Insurance for Mortgage Protection a Good Idea?
If you owe on a home mortgage, life insurance coverage is typically a good idea. This is especially true if you have a spouse who would be financially impacted by your death and/or minor children to consider.
Even if you don’t have children or a partner, affordable term life insurance can help protect your loved ones in the event of your passing, leaving them with enough funds to pay off your home or just covering the expenses that would be involved with listing and selling the property in your absence.
How We Chose the Best Insurance Companies for Mortgage Protection
In building this list of mortgage protection insurance options, we looked at 13 of the best term life insurance companies. Like your mortgage, term policies last for a specific period of time and are a more affordable option than permanent policies, so term is our suggested coverage option for mortgage peace of mind.
To choose our top picks, we considered factors such as availability, product features, and both included and optional benefits. We compared pricing, as well as evaluated consumer satisfaction and third-party industry ratings to determine which carriers can offer you the most trusted, affordable, and feature-rich coverage available.