The cost of mortgage protection insurance varies from person to person, and as with life insurance, your rate is based on your age and health, as well as the current value of your home, the amount of your regular payment, and the current payoff amount of the mortgage. With policies that make monthly payments in the event of a disability, your cost will vary greatly based upon the industry in which you work. A roofer, for example, is at a higher risk of disability than an accountant.

If you purchase mortgage protection insurance that pays off your loan in the event of your death, your insurance company will send a check directly to your lender for the current payoff amount on your mortgage. In turn, your heirs won’t have to deal with a home that has a mortgage attached to it. If your insurance covers disability or job loss, they may not cover your entire mortgage payment. Instead, they’ll cover a certain amount that’s specified in your contract.

Mortgage protection insurance is not the same thing as private mortgage insurance, which goes to the lender if you default on your mortgage, and doesn’t have a specific benefit for you the borrower. Mortgage protection insurance, however, protects you as a borrower. Although many lenders offer the insurance, it’s not built to protect them.