Mortgage Insurance does not cover payments if you are unable to make them and should also not be confused with home insurance.
Mortgage Insurance is an insurance taken out by the lender against the borrower defaulting on payments. Should this occur and the lender needs to repossess and sell the property, the Mortgage Insurance covers the lender should a shortfall arise between the loan amount and the net proceeds of the sale of the property.
By paying Loan Mortgage Insurance, this enables people who may have been unable to purchase an investment property to do so, without paying excessively high rates.
Mortgage Insurance can either be included in the loan (capitalised) or paid as a one off fee and is charged as a percentage of the loan. The Mortgage Insurance fee ranges from 1% to 1.25%.