In short
More than the balance. Add the amount you want paid off to the income the household would lose, then buy that as level term life from an insurer rather than the lender's mortgage protection product. $300,000 of 30-year Nectar Term is an estimated $30 a month for a healthy 35-year-old man and $24 for a woman, set during underwriting, and the policy follows you through every refinance and move.
Key takeaways
- Coverage equals the balance you want paid off plus the income your family would lose. The balance alone leaves a paid-off house and no way to pay the bills inside it.
- Level term from an insurer pays your family, not the bank, and the benefit never shrinks. Lender mortgage protection usually pays the lender and shrinks with the balance.
- $300,000 of 30-year term costs an estimated $30 a month at 35 and $41 at 40 for a man; women pay about 18 percent less.
- Your term policy follows you when you refinance or move. The lender's product usually ends with the loan.
- Mortgage protection insurance at closing is optional. It is not PMI, and declining it changes nothing about your loan.
Most homeowners who type "how much life insurance do I need to cover my mortgage" expect the answer to be the loan balance. That answer is wrong in a way that matters. A policy that pays off the house leaves your family with a free roof and the same grocery bill, car payment, childcare and property tax they had the day before, minus your paycheck.
This guide gives you the right number, compares the three products sold for this job, prices the common case at 35 and 40, and tells you what to say when a loan officer slides a mortgage protection form across the table at closing.
How much life insurance do you need to cover a mortgage?
Two lines, added together.
Line one: the balance you want gone. Usually the full remaining principal, because paying the house off removes the household's biggest fixed bill. Some families choose a smaller figure and let the survivor keep a low-rate mortgage; that is a fair choice if the survivor's income can carry the payment comfortably.
Line two: the income the household would lose. Your pay times the years the household would need it. With a child at home, count to the year the youngest is independent. Without children, count the years the survivor would need to get to a place where one income is enough.
Take a $250,000 balance, $60,000 of income, and $50,000 between savings and group life at work:
- If your partner's income already covers the bills: $250,000 plus one year of pay as a cushion ($60,000), minus $50,000, is $260,000, which rounds to a $300,000 policy.
- If your partner would need your income for 15 years: $250,000 plus $900,000, minus $50,000, is $1,100,000.
Same house, very different policies. The second line is the one people skip. The coverage calculator walks through both, and our guide to how much life insurance you need covers the income line in detail.
Level term vs decreasing term vs mortgage protection insurance
Three products are sold "for the mortgage." They are not the same thing.
| Level term life (from an insurer) | Decreasing term life | Lender mortgage protection insurance | |
|---|---|---|---|
| Who gets paid | Your beneficiary, in cash | Your beneficiary, in cash | Usually the lender, or a payout tied to the loan balance |
| Does the benefit shrink? | No. $300,000 in year one is $300,000 in year thirty | Yes, on a fixed schedule built to track the balance | Yes, typically with the balance |
| Price trend | Fixed for the term | Fixed, somewhat below level term | Often fixed while the benefit falls, so the cost per dollar rises every year |
| Underwriting | Health questions and records, sometimes an exam; your health earns your rate | Similar to level term | Few or no health questions, so everyone pays as if they were the riskiest applicant |
| When you refinance or move | Follows you, unchanged | Follows you, but its schedule no longer matches the new loan | Typically tied to the loan; ends or has to be bought again |
Decreasing term is the honest middle. It is real life insurance and it is cheaper, but its schedule is built for the original loan, and a refinance, a move or an extra payment breaks the match.
See what Nectar Term would cost you
Two minutes to a price, with your approval odds up front. No calls unless you ask.
Why level term from an insurer usually wins
Three reasons, in order of weight.
The family decides, not the bank. A level term benefit is paid to the person you name, in cash. They can pay off the house, keep a low-rate mortgage and invest the money, move closer to family, or hold it for the children. A lender product makes that decision for them on the worst day of their lives.
The benefit does not shrink. Your family's needs do not fall in step with an amortization schedule. In year fifteen the balance is lower, but the kids are in high school and college is next. Level coverage holds its full value until the day the term ends.
It costs less per dollar. Because we underwrite you, a healthy applicant pays a healthy applicant's price. A product with no health questions has to charge everyone as if they were the riskiest person who applies.
The catch, named: level term requires underwriting. If a serious health condition would make ordinary term hard to get, a lender's lenient product may be the coverage you can actually buy, and some coverage beats none. Try our simplified-issue path first; it goes up to $300,000 on a short set of questions with a same-day decision, and our guide to term life with type 2 diabetes shows what typically happens with the most common condition.
What does $300,000 of 30-year term life cost?
Our rate table is built on $500,000 of 20-year coverage in the preferred non-tobacco class: $34 a month for a 35-year-old man and $47 at 40. A 30-year term runs about 45 percent more, and $300,000 is three fifths of $500,000. Working it through:
- Age 35, man: $34 x 1.45 is about $49 for $500,000 over 30 years; three fifths of that is about $30 a month for $300,000.
- Age 40, man: $47 x 1.45 is about $68; three fifths is about $41 a month.
- Women pay about 18 percent less: roughly $24 at 35 and $34 at 40.
Two honest caveats. These are estimates for the preferred class, and the final price is set during underwriting; the standard class typically costs 40 to 50 percent more. And smaller policies cost slightly more per thousand dollars than larger ones, so the real $300,000 figure may land a few dollars above the arithmetic. If line two pointed you toward a bigger number, $1 million usually costs a little under double the $500,000 figure; the full table is in our pricing by age section, and our guide to term life insurance cost explains every input.
What happens to your life insurance when you refinance or move?
Nothing, if it is a term policy from an insurer. The policy is a contract between you and the insurer, and the lender is not a party to it. Refinance, sell, move across the country, pay the house off early: the premium and the benefit do not change, and your beneficiary still receives the full amount.
Lender mortgage protection typically works the other way. It is attached to a specific loan, so a refinance ends it and you buy again at your new age, with whatever health you have then. A homeowner who refinances twice in fifteen years makes three purchases at three rising prices.
One thing does change when you refinance: the numbers. A cash-out refinance that adds $80,000 to the balance adds $80,000 to line one. Check your coverage against the new balance, and if it is short, add a second policy for the difference rather than replacing the first. The first one is priced at an age you cannot get back.
What to tell a loan officer who pushes mortgage protection insurance at closing
Say this: "No thank you, we have term life that covers the mortgage." Then sign nothing related to it. You do not owe anyone a reason, and you do not need the policy in hand at the table; the loan does not depend on it.
Keep two things straight, because they get blurred:
- Private mortgage insurance (PMI) protects the lender if you default. A lender can require it when you put down less than 20 percent, and it pays nothing to your family.
- Mortgage protection insurance (MPI) is life insurance sold around closing that typically pays the lender if you die. It is optional. Declining it changes nothing about your rate, your approval or your closing date.
Mortgage protection insurance is sold alongside the loan, not as part of it. If anything at the table suggests your loan depends on buying it, ask for that in writing, and check the form against the plain-English closing guides published by the Consumer Financial Protection Bureau.
The same pitch often arrives by mail after closing, formatted to look like it came from your lender. It did not; your loan details are public record, and the letter is an advertisement.
Buying life insurance at closing when you need a decision fast
Some buyers decide they want coverage in force the week they get the keys. Two speeds apply:
- Simplified cases, up to $300,000 with clean health answers, get an instant or same-day decision through the issuing partners that use a short set of questions. A $300,000 policy sized to a mortgage is exactly this case.
- Larger amounts or a health history go to an underwriter who reviews prescription and driving records. Allow one to two weeks, and longer if an exam is ordered.
The practical move is to apply the week you go under contract rather than the week you close. Your Nectar Term quote shows your estimated approval odds and expected decision time before you apply, so you know which speed you are on. If you are under contract now, see your price; for a simplified case the policy can be in force before the keys are in your hand.
See what Nectar Term would cost you
Two minutes to a price, with your approval odds up front. No calls unless you ask.
Frequently asked questions
Should I get life insurance to cover my mortgage?
Yes, if anyone would struggle to make the payment without you. Buy level term from an insurer for the balance plus the income your household would lose, rather than the lender's mortgage protection product.
Is mortgage protection insurance worth it?
Rarely for a healthy applicant. It typically pays the lender, shrinks as the balance falls, and costs more per dollar because it skips underwriting. Level term pays your family a fixed amount for less. It makes sense mainly when health rules out ordinary term.
Does life insurance pay off a mortgage?
It pays your beneficiary a lump sum, and they choose whether to pay off the mortgage. That choice is the point: they can clear the loan, keep a low-rate mortgage and invest, or use the money for something more urgent.
What happens to mortgage life insurance when I refinance?
A term policy from an insurer is unaffected, because it is not tied to the loan. Lender mortgage protection is typically tied to the specific loan and ends when you refinance, so you buy again at a higher age.
How much is a $300,000 life insurance policy per month?
For a healthy 35-year-old man, an estimated $30 a month for a 30-year term and roughly $20 for a 20-year term, with the final price set during underwriting. Women pay about 18 percent less, and the price climbs after 40.
Nectar Term policies are issued by Nectar's partner insurers, each rated A or better by A.M. Best, and serviced by Nectar. Prices in this article are estimates calibrated to published 2026 averages and are not an offer of coverage. Final rates are set during underwriting.
Keep reading
Life StagesLife Insurance to Protect a Spouse's Retirement: The Math
Life insurance to protect a spouse's retirement: size a 10- or 15-year term to the lost Social Security check and the mortgage. About $78 a month at 55.
UnderwritingLife Insurance for Dangerous Jobs: How Underwriting Works
Life insurance for dangerous jobs: most roofers, loggers, pilots and officers are issued with no occupational rating; a few jobs carry a flat extra.
BasicsFinal Expense Insurance vs Term Life: Which Should You Buy?
Final expense insurance vs term life: if you are 60 or under and qualify, $100,000 of 10-year term costs about $36 a month at 55, far less per dollar.