Does Private Mortgage Insurance Cover Death?


When you put less than 20 percent down on a house, your lender will often make you purchase private mortgage insurance (PMI). This insurance pays the lender a percentage or portion of your outstanding loan amount should you default on your mortgage. However, PMI does not pay your outstanding mortgage balance to your lender in the event of your death.


If you put less than 20 percent of the purchase price of your home as a down payment, lenders will view you as an increased credit risk. To protect against financial losses in the case of default, lenders require owners to purchase PMI in exchange for giving you a loan. Your PMI continues until your mortgage balance reaches 78 percent or less of the original loan amount.

Mortgage Protection Insurance

If your goal is to make sure you don’t leave your loved ones responsible for your mortgage in the event of your death, consider purchasing mortgage protection insurance. Insurance policies vary by insurance carrier but generally, you pay a monthly insurance premium and if you die, your insurance company pays off your mortgage balance at the time of your death. One caveat to mortgage protection insurance is that the premium does not decrease as your outstanding balance decreases. For this reason, you may want to consider other types of insurance policies.

Life Insurance

A life insurance policy that is significant enough to pay off your mortgage at the time of your death can be a less expensive option than purchasing mortgage protection insurance. A term life insurance gives you coverage for a set amount of time, usually between five and 30 years. Permanent life insurance, such as whole or universal life insurance, gives you coverage during your entire life. You should talk to a life insurance professional to discuss which life insurance option best fits your needs.

Other insurance Policies

If you are considering purchasing insurance to pay off your mortgage in the event of your death, you may also want to consider other insurance options, too. Other insurance policies offer income payments to help pay your mortgage should you become permanently disabled and unable to work. Examples of these types of insurance policies include long-term disability and accidental death and dismemberment insurance.

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