A lot of people purchase mortgage insurance because they don’t know what their options are. They feel pressured when they sign for their mortgage and they are not told there is a less expensive and better alternative.
Mortgage insurance is similar to life insurance in that it pays out upon death, but with the added disadvantages that your bank or lender is the beneficiary (not you or your spouse) and it only pays out the amount of the mortgage (which is decreasing over time while your premiums stay the same). Life insurance on the other hand is cheaper and pays to the beneficiary of your choice the full amount covered. With life insurance you or your partner can choose to pay off your mortgage or use the funds (tax free) for any purpose you wish.