Bank Mortgage Insurance VS Life Insurance

The most common question that I get is about the difference between bank issued mortgage coverage and life insurance.  I will post some more details soon, but in the meantime, check out

http://www.cbc.ca/marketplace/in_denial/

Back in a bit…

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Here”s a little side by side comparison.  If you have your mortgage insured through your banks “Mortgage Insurance”, you may not be as protected as you think you are.

In most circumstances, the bank does their underwriting AFTER someone dies, which in english means, if you had a “pre-existing condition”, often times the bank will decline the coverage…  With life insurance, the decision is made ahead of time, which allows couples to plan ahead rather than living under the false pretense that they are covered…

SO What does this mean???

Well…  think of how hard you work to manage your bills right now.  Now remove one of the incomes from the family.  What kind of impact would that have on your life?  I’m guessing huge.

Feel free to drop me  a line and I will be happy to discuss your options with you.  There is no fee to meet with me and we’ll only put a policy in place if it makes sense to you… After all, it’s your financial stability we’re talking about

Mortgage insurance

Life insurance

Your insurance covers only your mortgage balance. You can choose from different types of insurance (i.e. term or permanent) with a death benefit to cover more than just your mortgage.
Even though your mortgage debt reduces over time, your premiums remain level. Your coverage amount does not decrease over time unless you choose to change it.
If you die, only the outstanding balance on your mortgage is paid off. If you die, the death benefit is paid to your beneficiary who can use it as they see fit, not just to pay off your mortgage.
The mortgage lender is automatically the beneficiary. You name the beneficiary.
If you take your mortgage to another company, you may lose your existing mortgage insurance and may be required to re-qualify for new mortgage insurance. If you take your mortgage to another company you keep your existing insurance, so you don’t have to re-qualify.
You lose all your coverage when your mortgage is repaid, assumed or in default. As long as premiums are paid your coverage remains in place, even if your mortgage is repaid, assumed or in default.
You have no flexibility to change your coverage as your needs change. If you decided you need coverage only until your mortgage is repaid but later realize you require coverage for other needs, you can convert your insurance to a permanent plan.
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One response to “Bank Mortgage Insurance VS Life Insurance

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