Comparing Mortgage and Term Insurance

Term Insurance Mortgage Insurance
I pay the premiums so I own the policy, right? Yes. You own the policy and you name your beneficiaries. No. You are part of a group policy and the lender is the beneficiary.

Is the coverage flexible? Yes. You choose the amount of coverage you want regardless of your mortgage balance. You can increase or decrease your coverage, renew your coverage and convert to permanent protection.
If you renegotiate or pay down your mortgage, or sell your home, you can continue your coverage.
No. The lender will only insure you for the amount of your mortgage.
You can’t alter, renew or convert the policy. If you move your mortgage to another lender, you can not transfer your policy.
Your coverage ends when the mortgage is paid off or ends.
Can my beneficiaries use the proceeds from the policy for something other than paying off the mortgage? Yes. Upon death, the proceeds go directly to your beneficiary who then decides how to best use the money. No. Upon death the benefit goes directly to the lender to pay off the mortgage.
Is the coverage guaranteed? Yes. Your insurance and premiums are guaranteed for the life of the policy. Only you can cancel or make changes to your policy. No. Your premium and benefits are not guaranteed. Your lender can make changes at any time.