 TITLE: What is Mortgage Protection Insurance? CONTENT: How Does Mortgage Protection Insurance Work?\n--------------------------------------------\nMortgage protection insurance operates like term life insurance—you make premium payments for the duration of the policy term and are only covered while the policy is in place. Many insurers issue policies that are the same length as the term of the covered mortgage, but policies may be available in five- or ten-year increments. Once you reach the end of the term, you are no longer covered.\nIf you die during the coverage period, the death benefit is paid to the mortgage lender. Your loved ones will not directly receive any of the proceeds from the policy, but the policy will pay the mortgage in full so they do not have to worry about making house payments. Some mortgage protection policies also cover mortgage payments for a set period if you become unemployed or disabled.\nDon't confuse mortgage protection insurance with other forms of mortgage insurance. The other types work to protect the lender if you default on the loan and are usually mandatory if you make a low down payment. They won't benefit your family if you pass away before your mortgage is paid in full. These types of mortgage insurance are:\n*   **Private mortgage insurance (PMI)**: PMI covers conventional loans from a bank or credit union. Most PMI premiums are paid monthly and cost between 0.5% and 2% of the total loan amount.\n*   **Federal Housing Authority (FHA)** **mortgage insurance**: Also called a mortgage insurance premium, it covers FHA loans that do not require a large down payment. An upfront mortgage premium of 1.75% applies, and you'll pay an annual mortgage insurance premium between 0.45% and 1.05% for the life of the loan.\n*   **U.S. Department of Agriculture (USDA) mortgage insurance**: This covers USDA loans that don't require a down payment. A monthly mortgage insurance premium of 0.5% of the loan amount applies.\nThere's also homeowners insurance, which is another type of policy that covers your home and the personal property within it in cases of natural disasters, accidents, theft and other events. END