Could your family stay in the home without your income?

With individually owned life insurance, you own the policy and you name the beneficiary. If you die while the policy is in force, the death benefit is paid to the person you chose, not to the lender.

Your beneficiary decides how to use it. They might pay off the mortgage, keep making payments, or use part of it for other needs. The coverage also stays with you if you refinance or move, as long as premiums are paid.

Private mortgage insurance protects the lender if a borrower defaults. It is usually required when a down payment is below a certain level. PMI does not pay your family anything and does not pay off your loan if you die.

Some lenders and third parties offer mortgage life or credit life insurance tied to a specific loan. The benefit is typically paid to the lender, and on many of these policies the benefit declines as the loan balance declines.

That design can work for some people. The difference worth understanding is who receives the money and who controls the decision.

Homeowners insurance covers the structure, belongings and liability against events such as fire or theft, subject to the policy terms. It has nothing to do with the death or illness of the owner and does not make mortgage payments.

Mortgage protection is a purpose, not a single product. It is often a term policy matched to the years left on the loan. Depending on the household, permanent coverage or optional living benefit riders may also be part of the discussion.