Mortgage Life Insurance

What You Need to Know About Bank Mortgage Insurance

In Denial – Bank Mortgage Insurance Exposed courtesy of CBC Marketplace

Just say “No” to the bank insurance offer and speak to one of our experienced life insurance brokers. We have access to all types of life insurance products designed to protect your mortgage at the lowest rates.

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Recall When You First Learned About Mortgage Insurance

  • Do you think the bank or your lender offered you anything close to the best value with such an easy tacked-on sale?

  • Do you recall the pressure of signing up for the mortgage creditor insurance?

  • Do you feel the bank person know mortgage insurance well enough? And do you believe it was explained to you properly?

  • If you purchased it, do you feel you had enough time to review what was offered?

It Can be Straight Forward If You Know Your Options

Below you can review and compare important reasons why owning traditional life insurance where your family is the beneficiary and not the bank is a superior choice.

We make it straightforward for you to obtain life insurance quotes from a wide selection of Canadian insurance companies. To view instant rates, simply complete the Life Insurance Quotes form with your mortgage amount and also do a quote for your spouse/partner. On average, we can help you save up to hundreds of dollars per year or more. There are also additional discounts for couples when applying for life insurance.

See Why Traditional Life Insurance is a Superior Choice

Bank Mortgage Insurance

  • Declining coverage amount based on mortgage balance
  • No discounts on premiums for healthy people
  • The older you are the higher the premiums
  • Pooled policy – No control
  • Policy is owned by bank
  • Non transferable
  • Premiums not guaranteed
  • Void if mortgage in default
  • Lapses if property is sold
  • Not guaranteed at renewal
  • Most bank plans expire at age 70 or earlier

Traditional Life Insurance

  • Coverage amount stays the same for the duration of the term
  • Discounts on your premium if you are healthy
  • Get the best rates based on your own health
  • You are in complete control
  • Policy is owned by you
  • Fully transferable
  • Premiums fully guaranteed
  • Insured even if mortgage is in default
  • Your insurance is portable
  • Automatically renewable to age 75
  • Fully convertible to permanent coverage

Are you surprised to learn the above? Does any of this cause you concern? One of the key points that many miss is the fact that the bank mortgage insurance is frequently not guaranteed renewable when you renew your mortgage. One person we know found this out the hard way. Her husband suffered a heart attack and when they renewed their mortgage she claims she told the person doing the paper work of her husband’s heart attack. She was asked to sign here and initial there – most people have experienced this with a bank.

When he died four months later the bank’s insurance provider (that’s right, the bank is not your life insurer, another company is, so now you have to deal with a company you have never dealt with before) investigated and declined the coverage stating that she had signed that there had been no change in her or her husband’s health – one of those initials she was asked to do. However, had the person doing the application heard her comment or if she had read what she was signing and not signed, then the bank would not have issued the insurance in the first place so either way her husband could not get insurance. Had he been covered by a life insurance policy, first he would have had his rates guaranteed for 10 or more years depending on the term and he was also guaranteed to be able to renew the policy regardless of his health but for a higher premium. Which insurance do you want?

Bank Mortgage Insurance Isn’t Guaranteed If You Switch Lender

So having determined that you want traditional life insurance to protect the balance of your mortgage, there are several choices. The primary one is term insurance where the monthly premiums are guaranteed for a fixed period of time, 10 or 20 years are the most common, but longer terms are available.

When you purchase a 10 year term policy, then in ten years, we will broker a new policy to cover the balance of the mortgage at that time, if you still have your health, we can usually do it for about what you are paying for the first ten years as the principal to cover is often less, having paid some of it off. If you are no longer insurable, then the guaranteed renewal rate is higher as they assume the only reason you would renew is because you are uninsurable, but at least you can still purchase it. Interestingly, many people just end up renewing without first getting a new quote or policy which could save them hundreds of dollars each year.

Those who do not want to take the risk of being uninsurable in 10 years and having to pay a significantly larger premium on renewal opt for a 20 year or longer term which will usually see their mortgage essentially paid off. They pay on average about 20% to 30% more in the first ten years for this security.

We also have access to three companies who offer decreasing coverage term insurance designed to save money by reducing the coverage to mirror the reduction of your mortgage balance. Make sure to ask one of our agents about this option.

Some people also will purchase a small critical illness policy as part of their mortgage protection insurance plan which will pay a lump sum if they contract a critical illness. Purchase enough to at least cover the mortgage payments for a year and help with extra expenses such as the spouses lost wages if they take time off work and travel costs including parking. Typical coverage amounts are about $50,000 for this purpose.

If you do not have disability coverage at work, some clients will purchase a disability policy for the amount of the monthly payments including taxes. The coverage is significantly better than bank mortgage insurance. There are a number of ways to keep the premiums down.

We also have access to the total protection bundle that offers life, critical illness and disability insurance combined as a package. It is well priced and is available for those under the age of 50.

Total Protection Bundle

So what does all this mean to you? It is simple, let the lender do what their specialty is and then simply say “No” to the offered insurance and turn to an expert in all types of life insurance to provide you with the best brokered solutions to meet your particular family insurance needs.

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All product names, trademarks, and trade names are the property of their respective owners. The Insurance Council (BC, AB, SK, MB), Financial Services Commission (ON), Chambre de la Sécurité Financière (QC), The Superintendent of Insurance (NB, NL, PE, NS) are the provincial and federal authorities that regulate, supervise and enforce standards for life insurance professionals.

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