Mortgage Life Insurance in CanadaAre you protecting your bank or your family? Life insurance is essential protection when there is a mortgage in place. When a death occurs a place to live is a requirement and ongoing concern for surviving family members. Did you know that mortgage life insurance offered by a bank is not the same coverage as a life insurance company? So is the mortgage life insurance offered by the lender a good solution? No. But let’s look at the positives first … At least some sort of coverage is in force (or is it?) It is very convenient to purchase since it is offered while signing the mortgage papers. The lender will pay the balance of the mortgage in the event of death (provided all terms and conditions are met and no exclusions apply) Now for the negatives of the lenders mortgage life insurance… The plans offered by the lenders are offered to protect the lender Coverage is in force unless the lender discovers a pre-existing condition. This can happen at time of death! Not the best time to discover that the mortgage coverage really isn’t in force. There are many exclusions and limitations Only a person named on the mortgage can be insured (sometimes only one spouse is on the mortgage but both contribute to the family income) The beneficiary of the policy is the bank – not the loved ones of the insured. The coverage can be cancelled by the lender (all insured’s – not just one) Rates can change The coverage declines as the mortgage declines. The person selling this coverage may not have a life insurance license (and therefore training) If you change lenders you lose your coverage – what if you are not able to obtain coverage now due to health?
Protect your family not your lender Buy a term life insurance policy instead of the mortgage life insurance offered by the lender. A term life insurance policy offers the following benefits If you change mortgage lenders your coverage stays in force. You can buy as much coverage as you feel you need Coverage does not decline unless you want it to. You can keep your coverage even after the mortgage is paid off You can pick your beneficiary. (this is especially advantageous because the beneficiary has more options this way) Rates are guaranteed You own the policy and it can not be cancelled except for non payment of premium Underwriting is done up front (so you know if you have coverage or not) The policy can be converted to a permanent policy. Premiums are usually lower with term life insurance These plans are offered by a life insurance licensed broker or agent
So what sounds better to you? Protecting your bank – or your family?
To protect your family learn more about term life insurance
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