Mortgage Insurance vs Life Insurance
Canada’s Top Life Insurance Expert reveals the truth on why Term Insurance is a much safer way to protect your home and family.You recently got approved for your mortgage and went to the bank to sign your final papers. Just as you were about to sign, the mortgage specialist at the bank poses you a question. If something were to happen to you, would you want your mortgage paid off? The only logical answer to this question is, of course, where do I sign? But after careful thought, you would probably reconsider once you did some more research. What you did not realize was that using a Life Insurance Canada product would have been a much better choice. You see, mortgage insurance at the bank does some underwriting after the incident occurs, so in this case after death. And the problem with that is that although you may think you answered their minimal questions thoroughly, it has been proven through a recent CBC article posted in Check This Link Out that mortgage insurance doesn’t always pay out. Life insurance is a substitute for mortgage insurance and often is very cost effective and ensures that proper underwriting is done so that eventually, should the worst happen, your family will get paid out and the house will be paid off, if not more than just that. Let’s look at this a little more deeper. Mortgage insurance being mandatory is a misconception !
Reasons Why you should use Life insurance vs Mortgage insurance
- Price – Mortgage insurance from the bank is always more expensive than life insurance. It usually can be over 50% higher than the life insurance quote when comparing it to a term 20.
Mortgage insurance supplied by the bank is usually what we would call a term five. Term five means that your monthly premium would stay the same for five years. The reason why I would refer to it as a term five is these days a lot more people are smarter with their money, and so rather than just go with one bank or stick with one bank permanently, a lot of people do their shopping around now, so they will shop around. Some people even use mortgage brokers, and mortgage brokers are proving to be more effective as they can supply you with numerous quotes giving you the best rate. Here’s an example. You’re currently with RBC for your mortgage. Your mortgage term ends in five years. You have the option to stay with RBC, but it looks like now TD is offering you a better rate. So what you would probably do is go with TD, but then you would have to re-sign up for your mortgage insurance. Well guess what, five years has gone by, you’re now five <Lost Signal>And there maybe a possibility that you may not even get approved. The premium, of course, the mortgage insurance from the bank, would be much higher than it was five years because age – the older you are, the more expensive the insurance is.
Mortgage insurance with a lender declines as your mortgage declines. So as you’re paying your mortgage down, your monthly premiums remain the same even though your coverage is lessening, even though your mortgage is reduced. This doesn’t make much sense. Why should you pay the same premium even though the mortgage is being paid off? Good question to ask yourself.
Portability. Mortgage insurance with a bank only covers you if you have a mortgage. So, for example, if you decide one day that you want to sell your house and rent, guess what, you don’t have any coverage any more because it’s only tied to the mortgage. Let’s say, for example, you want to move to a different house and you need to get a new mortgage and you decide to go with a new provider. Well, it’s not going to follow you. You’ll have to reapply either for the mortgage insurance with the new bank or you’ll have to go without mortgage insurance. It’s really up to, but with an individual life insurance policy, it will stick with you wherever you move, wherever you go, doesn’t matter on your situation for the length of the term, or if it’s permanent insurance for the rest of your life.
Mortgage insurance from the bank only pays the bank out as the beneficiary if you die. So, for example, he really had no choice. If you want to pay off half of the mortgage or a quarter of the mortgage, if you want to keep most of the money, you don’t have a choice. The mortgage is the first thing that’s paid off. However, with life insurance, you can decide what you want to do. Your beneficiary will decide what to do with the money. They can pay off half of it or they can pay off a quarter of it, or they can pay off all of it. But the choice will be with them. Whatever suits their needs at that particular time.
Mortgage insurance with the bank is not convertible to a permanent insurance. So for example, if you got really sick and if you had, let’s say diabetes or blood pressure issues or worse cancer, if you ever needed to switch your mortgage provider, you would not be able to get insurance again and you would not be able to get approved into a permanent insurance solution that would stick with you for life. It’s a little bit different with an individual life insurance policy, because with individual life insurance, your term insurance can be Preferred Rates
Double The PAY OUT on SIMULTANEOUS DEATH (CAR accident/plane crash)
Option to Lower your coverage ?
The moral of this entire story means that mortgage insurance to a lender often seems like the easy way out. If you analyze and research the details, you’ll realize you’ll be getting a much better product at a much better price with much better advantages if you go with the individual life insurance policy. And so I ask you and urge you to look into it, make sure you don’t have the mortgage insurance and if you do, come talk to me. Most important thing is talk to me before you cancel anything. It’s not good to just cancel the product, it would be better for you to wait until you have something else in place. Before I leave you now, I ask that you carefully click on this link. CBC Marketplace was kind enough to do a documentary on how life insurance, mortgage insurance through the lender in Canada doesn’t really do what it’s supposed to do, and the biggest thing is because of the underwriting. There’s a lot of cases where it’s not paid out. Unfortunately in some provinces, it’s now actually been made illegal. I ask you look into this a little bit further, because it’s a pretty big deal. Your family is going to depend on it, and as everybody knows, the house is the single most large purchase that you’ll ever make in your life. Make sure you protect your family with Life Insurance Canada.
Jack Bendahan your Toronto Life Insurance Broker can help you with comparison life insurance Toronto quotes.
