What is the Average Cost of Mortgage Protection Insurance?

Mortgage protection insurance, also known as mortgage life insurance, is a type of insurance policy that pays off your remaining mortgage balance if you pass away before fully repaying your home loan. This protection can provide peace of mind that your family will be able to keep the house if you die unexpectedly.

But what does mortgage protection insurance cost on average? The price can vary quite a bit based on your personal situation This article will break down the key factors that affect your mortgage protection insurance premiums and provide sample rate ranges so you know what to expect.

How Mortgage Protection Insurance Works

Like traditional term life insurance, mortgage protection insurance requires you to pay ongoing premiums for a set period of time, usually aligned with your mortgage repayment term. If you die during that term, the insurer pays off your remaining mortgage balance directly to the lender.

The death benefit decreases over time as you pay down the mortgage, but your monthly premiums generally remain level. Mortgage protection insurance also does not require a medical exam, so it can be an option for borrowers who may not qualify for regular life insurance.

What Impacts the Cost?

Many variables go into calculating your mortgage protection insurance premiums. Key factors include:

• Age – Older borrowers pay higher premiums, Costs really start to climb after age 50

• Gender – Men generally have higher rates than women.

• Health – Any health issues lead to higher costs. There is no medical exam, but you still must answer health questions.

• Nicotine Use – Smokers and tobacco users pay more.

• Policy Amount – The balance and term of your mortgage affect premiums. A higher balance or longer term means higher costs.

• Location – Where you live impacts pricing. Coastal and disaster-prone areas often have higher rates.

Average Cost by Age

Your age when you take out the policy is one of the biggest pricing factors. Here are some examples of estimated monthly premiums for mortgage protection insurance based on age:

30 years old

• $150,000 policy – $11
• $250,000 policy – $16
• $350,000 policy – $19
• $450,000 policy – $23

40 years old

• $150,000 policy – $13
• $250,000 policy – $19
• $350,000 policy – $24
• $450,000 policy – $30

50 years old

• $150,000 policy – $26
• $250,000 policy – $39
• $350,000 policy – $52
• $450,000 policy – $65

60 years old

• $150,000 policy – $63
• $250,000 policy – $105
• $350,000 policy – $147
• $450,000 policy – $189

70 years old

• $150,000 policy – $161
• $250,000 policy – $281
• $350,000 policy – $402
• $450,000 policy – $534

As you can see from these examples, mortgage protection insurance premiums jump substantially as you get older, even when keeping the policy amount the same.

Average Cost by Policy Amount

In addition to age, the amount of coverage you need also significantly impacts your mortgage protection insurance premiums. Some examples:

• For a 30-year-old, a $100,000 policy may cost around $8 per month, while a $500,000 policy could cost $40 per month.
• For a 50-year-old, a $100,000 policy may cost $17 per month, while a $500,000 policy could cost $85 per month.
• For a 70-year-old, a $100,000 policy may cost $81 per month, while a $500,000 policy could cost $407 per month.

You can use an online mortgage protection insurance calculator to get quotes tailored to the amount of coverage you need.

Average Overall Cost

Given all these variables, what is a typical range for mortgage protection insurance premiums? Overall, most policies cost between $20 and $100 per month.

According to insurance data, the average mortgage protection insurance policy is:

• For around $250,000 in coverage
• Taken out by a borrower aged 43
• With a monthly premium of $50

So in most cases, expect to budget $50 to $100 per month for a mortgage protection insurance policy large enough to cover the average home loan balance.

Strategies to Reduce Your Costs

Because mortgage protection insurance pricing is so personalized, there are some strategies you can use to try to lower your premiums:

• Shop around – Get quotes from multiple insurers to compare rates. Different companies use varying pricing models.

• Lock in early – Buy in your 20s or 30s to secure lower premiums for life. Costs increase rapidly as you age.

• Reduce tobacco use – Quitting smoking can potentially bump you into a lower premium class.

• Ask about discounts – Some insurers offer discounts like multi-policy, homeowner, or loyalty discounts to reduce rates.

• Lengthen the term – Stretching your coverage term from 10 years to 20 years can potentially lower monthly costs.

• Pay annually – Opting to pay one yearly premium at a time rather than monthly can lead to savings.

Is Mortgage Protection Insurance Worth the Cost?

Given the average pricing, is mortgage protection insurance ultimately worth paying for? That depends on your situation:

Pros

• Ensures your family keeps the home if you pass away
• Provides security if you don’t qualify for regular life insurance
• Locks in coverage you can’t be denied later as health changes

Cons

• Can be more expensive than regular term life insurance
• Requires paying premiums indefinitely until home is paid off
• Beneficiaries don’t get payout directly as with regular life insurance

For many homeowners, the peace of mind is worth the monthly premiums. But carefully consider your options and talk to an insurance agent to see if mortgage protection insurance is your best route.

Bottom Line

Most mortgage protection insurance policies cost between $20 and $100 per month, with the average being around $50. Your personal premiums depend on factors like your age, health, mortgage amount, and length of coverage. While not right for everyone, this type of insurance can provide affordable protection to cover your home loan if you pass away unexpectedly.