How Much Does Mortgage Insurance Cost?

Name: Mortgage Insurance Cost: Protecting Your Home and Family
Brand: Policybazaar
Rating: 4.8 (74425 reviews)

With a new home, new responsibilities also increase, such as property taxes, mortgage repayments, and upkeep costs. Mortgage insurance helps make sure that these responsibilities do not fall on your family members if unfortunate events arise. Let’s discuss what the meaning of mortgage insurance is, how much it costs, how the term plan complements it and the differences between them.

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What is Mortgage Insurance?

Mortgage insurance is a type of protection that secures the lender or the financial institution when the borrower is not able to repay the home loan because of death, disability, or income loss. Simply put, it makes sure that the lender recovers the loan amount even when the borrower is not able to meet the obligations of their repayment.

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What are the Types of Mortgage Insurance?

Let’s discuss the types of mortgage insurance:

Mortgage Protection Insurance (MIP): This kind of insurance pays the balance of the home mortgage loan if the borrower passes away, becomes permanently disabled, or receives a serious disease diagnosis.
Lender’s Mortgage Insurance: It safeguards the lender by making sure loan repayment if the borrower cannot meet the home loan obligations.
Group Mortgage Insurance: It offers low-premium coverage to all the customers looking for home loans through bank-insurance company group schemes.
Term Insurance linked with Home loan: It offers a term insurance plan that aligns with the amount of loan, helping families to repay the mortgage in case of death of the borrower.

Term Plans

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Crore

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₹50
LAKH

Life Cover

@ Starting from ₹ 8/day⁺

₹75
LAKH

Life Cover

@ Starting from ₹ 12/day⁺

What are the Benefits of Mortgage Insurance?

Here are the main advantages of choosing a mortgage insurance policy:

Simpler Home Loan Authorisation: Mortgage Insurance ensures the lender that the mortgage is paid even while the borrower has lower down payments or credit scores. Sharing part of income loss risk with the insurer will help more households and families be enabled to afford a home loan earlier in their life cycle.
Protection Against Default: The primary benefit of mortgage insurance is protecting a borrower against loan default. If a borrower is unable to continue making repayments due to death, disability or unemployment, the insurer will make the payments on the loan. That means the borrower's family would not have to make the repayments and they could keep their house.
Flexible payment options: Most mortgage insurance plans offer various kinds of payment options like single-premium, regular-premium or split-premium. This gives the possibility to pay premiums based on a borrower's convenience level, i.e. in a lump sum amount at closing or as part of regular EMI payments.
Stimulates Early Home Purchase: Borrowers with mortgage insurance have the ability to move into a new home several years earlier than the traditional system. As lenders bear less risk, they are willing to advance a greater proportion of a home's value in their loan-to-value ratios, creating an opportunity for first-time homeowners to establish equity positions sooner.
Prevents the loss of family and property ownership: If the borrower unfortunately passes away, then the insurance covers the bank balance on any remaining loan. This ensures that the bank won’t seize the property, which will enable the family to maintain their ownership of their house without having to struggle financially.

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What are the Factors that Determine Mortgage Insurance Cost?

Mortgage insurance pricing is influenced by:

Loan-to-Value ratio (LVR): High LVR means that the loan is riskier for the lender. This implies that the higher the risk of the loan, the more expensive the insurance policy against loan default.

Loan amount: Larger loans are more frequently insured with higher premiums.

Loan applicant’s creditworthiness: Borrowers with bad credit scores are more prone to pay higher mortgage insurance premiums.

LMI varies with Property Location: Given the area that the insurance company perceives as higher-risk may result in different LMI premiums.

Mortgage Insurance vs. Term Life Insurance

The decision of choosing the right kind of insurance protection is mainly affected by what goal you want to achieve. One of the best ways to secure your loved ones is to have a life insurance policy that can help your family after death to settle your home loan, while mortgage insurance primarily safeguards the lender against loan-related losses.

Parameter	Mortgage Insurance	Term Life Insurance
Primary Purpose	Protects the lender against financial loss if the borrower defaults on the mortgage.	Protects your family financially by providing a death benefit to the nominated beneficiaries.
Who Benefits?	Your mortgage lender or the mortgage provider will normally be the first to receive the proceeds.	Your dependents or the other persons you name as beneficiary after your death may receive the benefits from your life insurance.
Premium Structure	Given the mortgage insurance cover and your lender's policies, mortgage insurance premiums may be paid upfront or rolled into your mortgage.	Mortgage or Life Term insurance premiums are mostly paid on a regular basis over the insured period.
Coverage & Payout	Coverage is linked to the outstanding mortgage. It gets reduced as you reduce the unpaid loan balance and gets terminated at the end of the loan, just like a home insurance policy would do.	Term Insurance is a financial cover policy which remains constant throughout the policy term. In case of the policyholder’s death, the nominated beneficiary will receive the payout
Use of Payout	Majority of the payout will be used to offset the risk which the lender faces if the borrower fails to repay the loan in a timely manner.	The payout may be put to various purposes by the beneficiary who may use it to repay the house loan or address other financial needs.

Why Term Life Insurance is Crucial for Homeowners?

A term insurance plan can be specifically useful in case you have a home loan as follows:

Settle the mortgage balance: Keep your family from having to move away from home.
Consider other expenses: Be it day-to-day expenses, education costs, or outstanding debts.
Assure your family’s financial safety: The premium for mortgage insurance is one of the main cost factors for your home loan protection.

How Term Life Insurance Can Complement Mortgage Insurance

Opt for a term insurance policy which is of the same level or even surpassing your mortgage balance as the death benefit. Your family, for example, will use this life insurance to settle the debt without too much disturbance.

Key Considerations:

Cost: Include the premiums for mortgage and term life insurance as part of your budget.
Coverage amount: Pick a term life insurance plan that will cover not only your mortgage but also your financial liabilities.
Policy term: Select a term life insurance plan that will expire at the time when your mortgage will also be paid up.

Wrapping Up!

Homeowners should understand the difference between mortgage insurance and term life insurance. Mortgage insurance is a risk cover only to the banks and not to you. On the contrary, term life insurance is a cover that's for the benefit of you and your family.

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What is Term Insurance

FAQs

How is mortgage insurance calculated?

Ans: The calculation of mortgage insurance is typically done on certain loan parameters like the loan amount, the loan tenure, the age of the borrower, the health condition of the and the coverage the is hoping for. Also, the insurer may factor in the remaining home loan principal repayment amount to settle the premium requirement.
How costly is mortgage insurance?

Ans: Mortgage insurance isn't priced uniformly in India, so your insurance premium might depend quite extensively on the borrower's age, coverage and term, loan amount, etc. However, by comparing quotes of insurance premiums from different companies, you can easily find your desired insurance coverage at a reasonable cost.
What life insurance is best for a mortgage?

Ans: Getting term life insurance can be a good way of protecting a mortgage. Not only is a term policy life cover with relatively low insurance premiums, but the family gets the payout to settle the remaining debt of the home loan from the deceased person's life.
Which is better, life insurance or mortgage protection?

Ans: Most borrowers in India may prefer term life insurance as it gives the benefit of flexibility. The death benefit can clear the remaining home loan in full, and still, there would be money left for your family's other financial needs.

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˜The insurers/plans mentioned are arranged in order of highest to lowest Sum Assured(SA) offered by Policybazaar’s insurer partners offering term insurance plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI.

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in

+On the basis of your profile

+Rs. 410/month is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10

+Rs. 410/month (Rs.14/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age rounded off to nearest 10

+Rs. 245 is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 8/day is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10

+Rs. 15/day is starting price for a 75 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10

+Rs. 504/month is starting price for a 1.5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 494/month is starting price for a 2 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 636/month is starting price for a 3 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 918/month is starting price for a 5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,286/month is starting price for a 7 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 453/month is starting price for a 1 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs.582/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 786/month is starting price for a 3 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,374/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,592/month is starting price for a 7 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 525/month is the starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 68 years of age.

+Rs. 668/month is starting price for a 2 crore term life insurance for an 25 year-old male, non-smoker, with no pre-existing diseases, cover upto 45 years of age.

+Rs. 1,200/month is starting price for a 2 crore term life insurance for an 35 year-old male, non-smoker, with no pre-existing diseases, cover upto 55 years of age.

+Rs. 410/month is starting price for a 1 crore term life insurance for an 18 year-old Female, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 577/month is starting price for a 1 crore term life insurance for an 18 year-old Male, self employed, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

*The full refund of premium is available on availing the one-time option of refund of premium. Total premium paid for policy (paid for add-ons) will be the special exit value, payable on availing the one-time option of refund of premium if you wish to completely exit the policy.

+Rs. ₹361/month is the starting price for a ₹1 crore loan cover with an 8% interest rate for an 18-year-old male, non-smoker, with no pre-existing diseases, loan tenure up to 20 years, rounded off to the nearest 10

Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited

We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881

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Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana – 122001 | Registration No. 742, Valid till 09/06/2027, License category- Composite Broker Visitors are hereby informed that their information submitted on the website may be shared with insurers. Product information is authentic and solely based on the information received from the insurers.

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