Assuming you use a mortgage to finance your home, it just makes good sense to ensure your investment is adequately protected through an insurance plan â one that will pay off your mortgage should anything happen to you.
But, there is more than one option for insuring your mortgage. Many people are unaware that their lending institution is not the only source for this kind of protection and that better choices may exist. Choices with lower cost and greater flexibility. So, it makes sense to do some shopping and comparing
Your mortgage lender will usually offer you mortgage insurance to cover the balance owing, if you should die before the mortgage is paid off. But you may also choose to buy insurance directly from your independent life insurance adviser instead. This is often a less costly option and offers much more flexibility.
Your mortgage lenderâs joint coverage is very different from the joint coverage you buy directly from an insurance company. With the lenderâs coverage, the death benefit is paid directly to the lender on the first death and the coverage ends.
Is mortgage insurance the same as an âInsured-Mortgageâ? No. Mortgage insurance on your life is not the same as an âinsured mortgage.â An insured mortgage protects the mortgage lender in case you do not make your mortgage payments. This coverage is provided by CMHC â Canada Mortgage and Housing Corporation â and is required if you have a âhigh-ratioâ mortgage. (A mortgage is high ratio if the amount borrowed is more than 75% of the purchase price or the appraised value of your home, whichever is less.) Contact us, we believe we can cater to your needs in an effective and ethical manner.
MORTGAGE TERM INSURANCE PROTECTION
Lending Institutions VS Personal Insurance Companies
It’s about getting the most from your money.
- Your lender owns the policy. If you find a better rate at another lending institution, you may have to re-qualify medically for insurance protection.
- The lender automatically pays off the balance of your mortgage if you pass away. Your beneficiaries cannot decide how to use the funds.
- You have a lending institution employee to look after you.
- The cost of coverage may increase every year while coverage remains the same.
- Insurance protection stops when the property is sold.
- Generally, mortgage life insurance from lending institutions is non-convertible - no cash values, premium flexibility, or ability to switch to a permanent insurance policy.
- Lending institutions usually cover the exact amount of your mortgage.
- Your coverage decreases while you pay off your mortgage. Once the mortgage is fully paid off, coverage stops.
- Late mortgage payment = late mortgage insurance payment. At most banks, you lose your protection after 90 days.
- The critical illness protection covers few basic illnesses.
- You own the policy. You are free to switch your mortgage to another lending institution without jeopardizing your life insurance coverage.
- Your beneficiaries decide how to use the funds - pay off the mortgage, provide monthly income, or take care of more immediate needs.
- Your insurance and financial advisor to arrange and service the policy.
- You choose the best solution and premium from a range of term and permanent insurance plans that maintain your premium level for a specific time period.
- Insurance protection continues even if the property is sold.
- Most personal term life policies can be converted to permanent policies irrespective of your health changes, with no need to re-qualify medically.
- Your coverage does not decrease while the mortgage is being paid and does not stop once it is fully paid. You may reduce the insurance amount as per your needs.
- Your only obligation is to pay the premium, so the policy remains active. Some companies offer a premium holiday.
- Critical illness protection covers 24 major illnesses with or without return of premium.