How Much Mortgage Protection Insurance Do I Actually Need?
Marcus Reid
Mortgage & Insurance Analyst
One of the most common questions we hear from homeowners is: "How much coverage do I actually need?" It's a great question — and the answer is more nuanced than simply matching your current mortgage balance.
Start With Your Outstanding Balance
The baseline for any mortgage protection policy is your current outstanding mortgage balance. This is the minimum amount of coverage you need to ensure the home loan is fully paid off in the event of a claim.
Consider a Level vs. Decreasing Benefit
A decreasing benefit policy mirrors your mortgage balance — as you pay down the loan, the coverage amount decreases proportionally. This keeps premiums lower. A level benefit policy maintains a fixed payout regardless of how much you've repaid, giving your family extra financial flexibility beyond just the mortgage.
Factor In Additional Costs
- Property taxes and homeowner's insurance (12–18 months of reserves)
- Home maintenance and repair fund
- Moving costs if the family needs to downsize
- Legal and estate settlement fees
- Any second mortgage or home equity loan balance
A good rule of thumb: add 10–15% to your outstanding mortgage balance to cover ancillary costs and give your family a financial cushion.
Use Our Free Calculator
The fastest way to get a precise number is to use our coverage calculator. Enter your mortgage balance, remaining term, and monthly payment, and we'll generate a personalized coverage recommendation along with an estimated premium range — in under 60 seconds.