The problem I see with requiring such insurance is that I'd already be paying whatever interest rate on a higher loan amount for the same 15- or 30-year period and it's rather insulting when a high credit score isn't a signal that the loan is low risk. How many years of literally 0 late bill payments do I need before I can reasonably expect a bank to assume that I won't miss the payments that I sign up for? (Undefined, unless one has the 20% up front, then 0.) It's a bit of a joke.
Anyway, I guess that got a bit rant-y; just saying that this feels more like exploitation by banks than banks offering a reasonable option. It lowers one's purchasing power unless one is able to save for a down payment.