Last Updated on October 10, 2025 by The Insurance Pros
Michigan Homeowners: Term Life or Mortgage Protection?
When you buy a home, two common ways to protect your family are term life insurance and mortgage protection insurance (MPI), sometimes called group mortgage life. They work differently; one typically pays your beneficiary, and the other usually pays the lender. Here’s a quick guide to help you compare.
Quick definitions:
- Mortgage Protection (MPI/group mortgage life) is a form of credit life insurance that typically pays the lender if you pass away during the coverage term and often decreases with your loan balance.
- Term Life: You choose the coverage amount and term (e.g., 20 or 30 years); the benefit is paid to your named beneficiary to use as needed (mortgage, bills, childcare, etc.).
Side-by-Side Comparison
| Feature | Mortgage Protection (MPI) | Term Life Insurance |
|---|---|---|
| Who gets paid? | Typically, the lender receives the payment to cover the loan balance. | Your beneficiary (spouse/family) chooses how to use funds. |
| Coverage amount | The coverage amount often decreases as the mortgage balance increases. | You select a level amount for the full term. |
| Underwriting | Underwriting is typically simplified and may not require a medical exam. | Typically, the underwriting process necessitates a medical exam, with healthier buyers typically receiving more favorable rates. |
| Flexibility & portability | The policy is linked to your mortgage, making it non-portable if you refinance or relocate. | Fully portable; your family can use benefits as needed. |
| Typical value | Convenient but may cost more per dollar of coverage. | This is typically the most cost-effective option for buyers who are in good health. |
When Each Option Might Fit
Mortgage Protection (MPI)
- You prefer a simplified application focused on your loan.
- You’ve had difficulty qualifying for fully underwritten term life.
Term Life
- You want your family, not the lender, to decide how to use the benefit.
- You’re healthy and want the most coverage for your premium dollar.
- You want portability if you refinance, move, or change lenders.
Michigan Notes
In Michigan, mortgage life is treated as a form of credit insurance. For questions or complaints about insurance products, contact the Michigan Department of Insurance and Financial Services (DIFS) at 877-999-6442 or visit Michigan.gov/DIFS.
Get Guidance
A licensed Michigan agent can compare policy options and riders, such as conversion or waiver-of-premium, based on your goals and budget.
