About a week after my fiancé and I became official homeowners, he received a mail solicitation for something called "MORTGAGE FREE HOME PROTECTION". (Emphasis not mine.)
This "program" would purportedly "guarantee" a mortgage-free home for our family if one or both of us died. The offer came with a small blue card encouraging Teddy to mail back our birth dates, phone numbers, and tobacco-use status, along with the best time to call, in a self-addressed stamped envelope.
At the very bottom, in tiny, but still all caps, it read "not affiliated with any lending institution."
"This has gotta be a scam, right?" he said, handing me the papers.
"Oh, absolutely!" I said. I’m always down to call out scammers. "That’s not how things work."
I had opened up a near-identical mailer myself a few days earlier. Then, a few days later, we got another one. And another one. And another one.
I know scammers are tenacious, but the mountain of spam made me curious. So I googled. Turns out mortgage protection insurance is a legitimate insurance product. Whether you actually need it — and how or from whom you should get it — is another issue, but first, a few basics.
What is mortgage protection insurance?
Mortgage protection insurance (MPI) is a term life insurance policy that helps your loved ones pay the mortgage on a family home in the event of your untimely death.
Policies typically last 15 to 30 years, but the payout — or, more accurately, the death benefit — decreases alongside your mortgage. In other words, the closer you get to that 15- or 30-year mark, the less money your policy provides. Plus, its beneficiary is actually your mortgage lender. If you die, the money goes directly to them, not your loved one(s) — and there’s a good chance it won’t cover the full remaining balance of your mortgage.
Is MPI worth it?
If you’re now thinking, "shouldn’t I just get life insurance?", well, you’re onto something. Most people are better-served by a term life insurance policy, since, among other things, it covers more than just the mortgage and you can name your beneficiary.
But there’s a rub: MPI is a guaranteed approval policy, meaning you can qualify without going through the underwriting (or medical exam) associated with straight-up life insurance. That guaranteed approval almost always translates to higher premiums for people in good health. But if you’re not one of them and keep getting turned down for traditional life insurance, MPI is an option. You can find an in-depth look at the pros and cons of MPI, courtesy of Policygenius’ Colin Lalley, right here.
Vetting MPI Companies
Before I sign off, though, a few more notes on my spam: MPI is a legit (albeit limited) insurance product, but I couldn’t really tell you for sure that any of those offers were.
I'm generally skeptical of anyone who uses all caps and always press pause when an offer uses "guarantee" and "free" in a sentence. Plus, the only company clearly identified or recognizable on the solicitations was my mortgage lender — and the mailers went out of their way to clarify they were in no way associated with them.
None of them asked for our Social Security numbers or a credit card, but still, I’m going to stump for not sending personally identifiable information of any kind to a company through the mail.
You never know who exactly you’re inviting to call. (By the way, if it winds up being the "IRS" or "Microsoft Tech Support", just hang up.) You also can't guarantee no one's rifling through their mailbox.
If you are interested in mortgage protection insurance, contact a broker or insurance company directly. Do some vetting on your own, too. Check a company's standing with the Better Business Bureau and/or read online reviews.
(Psst: PolicyGenius can help you find a policy that fits your needs. If you’re not ready to pull quotes, check out our primer on the best life insurance companies of 2018 for an overview, along with more insurance shopping tips.)