PMI protects the lender. Lender coverage usually shrinks. Your own Mortgage Protection is yours — and it stays yours.
Compare My RatesCall (410) 500-2733If you are buying a home, you may hear three terms that sound alike. They are not the same thing, and confusing them can leave a family unprotected at exactly the wrong moment. Here they are, in plain English.
PMI is insurance your lender requires when your down payment is small. It protects the lender if you default on the loan. It does not pay your family anything, and it does not keep your family in the home if the breadwinner dies. When people say "my mortgage already has insurance," this is often what they mean — and it is not family protection.
Some lenders arrange mortgage protection coverage of their own. That coverage usually shrinks as the mortgage balance shrinks — the protection gets smaller over time, while your family's need does not. Read the terms of any lender-arranged policy carefully: who it pays, how much it pays, and how that amount changes.
Your own Mortgage Protection is a life insurance policy the homeowner owns and controls, sized to the mortgage, so the family can pay off the mortgage or keep paying it if the breadwinner dies or becomes disabled. You pick your own broker and your own policy — the lender does not pick it for you.
| PMI | Lender Mortgage Protection | Your Own Mortgage Protection | |
|---|---|---|---|
| Who it protects | The lender | Varies — check the policy | Your family |
| Who owns and controls it | The lender requires it | The lender arranges it | You own it |
| What happens as the mortgage shrinks | It ends when an equity threshold is met | Coverage usually shrinks with the balance | Sized to your mortgage; you control it |
| If the breadwinner dies | Your family gets nothing from PMI | Depends on that policy's terms | The benefit can pay off the mortgage or keep paying it |
Under 12 U.S.C. § 1972, a bank cannot condition a loan on you buying its — or its affiliate's — Mortgage Protection insurance. In plain terms: a bank can't force it, and it can't condition your loan on it. An affiliate may offer coverage with proper disclosure; that is separate from conditioning a loan on buying it. If you ever feel pressed to buy a lender's policy to get your loan, that is worth a conversation before you sign anything.
| Your need | What fits |
|---|---|
| You want your family to stay in the home if you die | Your own Mortgage Protection |
| You want coverage that does not shrink away | Your own Mortgage Protection, sized to your mortgage |
| You are buying with a small down payment | PMI may be required by your lender — and it is still not family protection |
| You were offered a lender's policy at closing | Compare it against a policy you own before you decide |
Landis Whitehurst is a Life Insurance Broker and a Maryland real estate salesperson (license #5018966, affiliated with KWCP Referrals, referral status). He works with homebuyers, realtors, and lenders across Maryland — and he answers his own phone.
Compare your rates in about a minute, with no name or phone number required — or call Landis directly.
Compare My RatesCall (410) 500-2733