The main advantage to "mortgage insurance" is a simplified underwriting process (but only up to a certain amount). Fidelity Life Association has a similar term product that doesn't require a mortgage and is incredibly competitive when you look at the traditional players in the mortgage market like: Shenandoah, Old Mutual (F&G), and Mutual of Omaha.

Having said that, a fully underwritten product will generally be less expensive because they accept less adverse risk - having a complete picture instead of just part of it when they make a decision. Your home and auto person should have that (and should have been able to explain this). Check them out along with what other independent agents can offer you. A good agent won't mind a little friendly competition if it benefits you in the end.