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Many people have questions about the differences between homeowner’s insurance and mortgage protection insurance. Simply put: Homeowner’s insurance protects your home from unexpected damage, whereas mortgage protection insurance protects your family from losing your home due to an unexpected loss of income.
In this article, we’ll explore these two insurance products for homeowners to explain what they are, what they cover and how they’re different.
Mortgage protection insurance, often called MPI, is a term life insurance policy designed for homeowners. If you pass away during your term (the time you’re paying premiums to the insurance company), your beneficiary will receive a death benefit to pay off your mortgage.
MPI is different from PMI, or private mortgage insurance, which protects your lender if you default on your loan. While MPI is optional, PMI can be required and is designed to protect your mortgage lender as opposed to you and your family.
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