Thinking of buying a new home? Your mortgage lender may offer the option of buying mortgage insurance (also known as creditor insurance). But do you really need it? Or do you need mortgage protection insurance instead?

They sound similar, but they’re not the same.

Mortgage protection insurance is a life insurance policy that offers your family or beneficiaries a certain amount of money if you were to die. In such a case, with an active life insurance policy, your beneficiaries would receive a tax-free amount of money, called the death benefit. (The exact amount they’ll get depends on how much coverage you have.)  

With a life insurance policy, you get to:  

•keep your coverage even as you pay off your mortgage, 

•keep your coverage even if you move, and 

•select a beneficiary to inherit the death benefit.

With life insurance, you’re leaving your beneficiaries with the flexibility to use the death benefit in any way, for any reason. For example, they can use that money to cover:  

•mortgage payments, 

•debts, 

•the cost of other living expenses.