There are key differences you should know about if you're deciding which type of policy to buy:
Only covers your mortgage: General life insurance policies usually offer a cash payout that allows beneficiaries to decide how to spend the money. MPI only covers up to the amount owed on your mortgage and the money goes directly to the lender. Decreases over time: The value of a standard term life policy usually doesn’t decrease over the policy’s term and may even be subject to regulations that prevent any decrease in the value of a policy. MPI goes down over time in sync with the decrease in your mortgage balance. Can’t name your beneficiaries: Most life insurance policies allow you to name one or more beneficiaries, including your spouse, heirs or other parties. With MPI, the policy is paid to your mortgage lender, leaving the benefit only to the person entitled to your home after your death.   Medical history is less important: Standard life insurance policies may require a medical exam or a detailed medical history and your level and coverage and premiums may be based on your health. Most homeowners can get MPI without a physical or providing medical records, making it an appealing life insurance option for those with health problems.