If you have bought a house recently, your mailbox has probably been flooded with pitches for mortgage-protection insurance. Such policies ensure that your mortgage will be paid off if you die. It's the kind of coverage most homeowners shouldn't be without. But a mortgage-protection plan isn't the best, or cheapest, way to get it.

The most aggressive marketers of mortgage protection are a dozen or so insurers that solicit clients by mail. The insurers get lists of home buyers from banks and mortgage companies. Would-be policyholders apply by mail. They then pay a fixed premium that is tacked onto the monthly mortgage payment and remitted by the lender to the insurer.

BIG DRAWBACKS. Mortgage-protection policies have two main attractions: They provide coverage that exactly matches your mortgage balance, and you write only one check a month for both your mortgage and insurance.

But unlike regular term or whole-life insurance, the beneficiary in a mortage-protection policy is your lender, not your heirs. Alan Golden, an agent for Prudential Insurance in Bethesda, Md., tells his customers: "I'd just as soon give the spouse the option of paying off the house or investing the money and retaining the homeowner tax deduction." Golden sells a mortgage-linked decreasing-term policy with coverage that declines as the mortgage is paid off. But he prefers to steer clients to term or whole-life insurance.

Regular term insurance is often cheaper than mortgage-pro-tection coverage. A 30-year-old male nonsmoker who insures a 30-year, $100,000 mortgage with Liberty Life Insurance pays an annual premium of $348. But $100,000 worth of term coverage from Metropolitan Life Insurance would cost just $142 in the first year. Term premiums rise annually, but few people hold such policies into their 50s and 60s, when charges skyrocket.

Adding coverage in case you are disabled and can't pay premiums is also cheaper with term insurance. Prudential charges $175 for the first year for $100,000 of term with a disability waiver. With mortgage insurers, disability coverage is a costly add-on that varies depending on mortgage payments.

If simplicity is your top priority, a by-the-mail mortgage-protection policy may be a good bet. But for cost and flexibility of coverage, a regular life insurance policy that covers housing and other needs is the smarter choice.

WHAT COVERAGE
      WILL COST
      Cost of $100,000 coverage for a 30-year-old, nonsmoking male 
      MORTGAGE             ANNUAL
      LIFE INSURANCE      PREMIUM
      LIBERTY LIFE           $348
      MONUMENTAL GENERAL      264
      REGULAR TERM  FIRST-YEAR
      LIFE INSURANCE  PREMIUM *
      METROPOLITAN LIFE     $142
      PRUDENTIAL             165
      *Term life premium rises as policyholder ages
      DATA: BW
      
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