This is a popular way to use affordable life insurance.  Mortgage protection is basically a policy that pays a death benefit that will be enough to pay off a person’s mortgage in the event of death.     A term life policy will be taken out for the term of the mortgage.  A level term or a decreasing term product can be used for this, although a level term is a much better value.   Decreasing term has a decreasing benefit, and level term has a level benefit.  Once the term product is selected for 10, 15, 20, or even 30 years, that rate is locked in.   The great thing about term is that the beneficiary can use the proceeds however they want to.  In other words, they can pay off the whole mortgage, continue to make payments, or do something completely separate.

Having a level term policy with the flexibility of the use of proceeds can be very beneficial.   This is a single use of insurance that is only factoring in one debt of the consumer.     Often times there are other debts that would be left to a beneficiary, college funding goals that might not be reached, lost income, etc that need to be considered.  As a single use product, term life can certainly be a perfect fit.

Another type of term product that is being used on a regular basis for mortgage protection is return of premium term.   This is a term program that is level for a period of time (the length of the mortgage) and then if the client is still alive at the end of the term they get a full refund of premiums paid.   The downside to this product is that it is more expensive than a regular term, but guarantees the money back.