Last Updated on August 29, 2025 by The Insurance Pros
Michigan Homeowners: Term Life or Mortgage Life?
When you buy a home, you’ll often see two ways to protect your family if the worst happens:
Term life insurance and mortgage life insurance (also called mortgage protection insurance or MPI).
They work very differently. Here’s how to compare them, so you can choose what fits your goals and budget.
Quick definitions:
- Mortgage Life (MPI): A form of credit life insurance that typically pays your lender if you die during the coverage term; the benefit often decreases as your loan balance declines.
- Term Life: You select the coverage amount and term (e.g., 20 or 30 years); the death benefit is paid to your beneficiary, who can choose how to use the funds.
Side-by-Side Comparison
| Feature | Mortgage Life (MPI) | Term Life Insurance |
|---|---|---|
| Who gets paid? | Usually the lender pays the outstanding mortgage. | Your beneficiary (family) decides how to use the funds. |
| Coverage amount | Often decreases with the loan balance. | The level of coverage you choose will remain constant throughout the full term of the loan. |
| Underwriting | This option is often simplified and may not require a medical exam. | Medical underwriting is common; the best rates are for healthy applicants. |
| Flexibility & portability | Tied to the mortgage; limited beneficiary choice. | Portable; can cover mortgage plus income, debts, tuition, etc. |
| Typical value | This option is convenient but may be more expensive per dollar of coverage for healthy buyers. | Often the most cost-effective per dollar of coverage for healthy buyers. |
| Ownership | A group policy is owned and controlled by the lender or issuer, while you act as a certificate holder. | You own the policy and control beneficiaries and riders. |
When Each Option Might Fit
Mortgage Life (MPI)
- You prefer a quick, simplified application focused on paying off the loan.
- You’ve had difficulty qualifying for fully underwritten term life.
Term Life
- You want your family, not the lender, to decide how the benefit is used.
- You’re generally healthy and want more coverage per premium dollar.
- You want portability if you refinance, move, or change lenders.
Michigan Notes
In Michigan, mortgage life is commonly treated as a form of credit life insurance.
For questions or complaints about insurance products, contact
Michigan Department of Insurance and Financial Services (DIFS).
Get Guidance
A licensed Michigan agent can compare quotes and riders (e.g., conversion options, waiver of premium) based on your goals and budget.
Get a Michigan Life Insurance Quote
FAQs
Is Mortgage Life Insurance (MPI) required?
No. Lenders may offer MPI, but it’s typically optional. It’s different from PMI (private mortgage insurance), which protects the lender if you default on payments.
Does mortgage life always pay off my entire loan?
Not necessarily. Benefits usually track your remaining balance and are paid directly to the lender. Please review the policy to understand the coverage limits and any exclusions.
Can I convert term life to permanent coverage later?
Many term policies allow conversion for a limited time without a new medical exam. Availability, timing, and eligible permanent products vary by insurer; check your policy.
Beyond the Mortgage: Other Uses of Life Insurance
Life insurance doesn’t just protect a mortgage balance; it can also provide long-term financial support for your loved ones, help fund education, or even support a cause you care about.
For more information on how you can use life insurance to fund Michigan charities, see our full guide:
Life Insurance & Michigan Charitable Giving.
Disclosures: This article is for general education, not legal, tax, or individual financial advice. Product features, underwriting, and availability vary by insurer and state. Always review your policy and consult a licensed agent.
