Just say no to mortgage insurance
When buying a new home, the experience can be a daunting one. There’s a lot of paperwork and some very legal, very seriously Find documents to sign. It all gets pretty overwhelming, especially if it’s your first time. One thing banks love to do is include mortgage insurance in your mortgage contract. Right there, with a dangerous looking check box and signature line, you have to fill that out if you want to inconsiderate “Optical output”.
We want you to know You are far better off without the insurance that the bank includes with your mortgage. Yes, we want you to walk into this mortgage broker’s office, check this box, sign the line, and log out with complete confidence!
That’s not to say you don’t need to insure your mortgage, but regular life insurance is far better. Here are all the reasons why:
Bonuses: Everyone pays the same premium when it comes to mortgage insurance. There are no discounts if, for example, you are a non-smoker or healthy (or if you are a woman who statistically lives longer). As a result, you usually won’t get the best deal. Even if you are a chain smoker who eats a pound of bacon Every day You still probably won’t get a better deal. In fact, you can’t pay for anything. Read on, there’s more.
Underwriting: A scary technical sounding word that just means your insurance is “insured” to see if you qualify. Provided you do, your insurance costs will be based on your age, health, activities, and pre-existing conditions. However, as long as you qualify and pay your premiums, your coverage is guaranteed and the policy is paid out. The bank’s mortgage insurance can use post-claim underwriting. This means that they will only decide if you qualify after a claim is made. At that point, they may decide you never qualified and end up paying nothing.
Decreasing benefit: The value of the bank’s mortgage life insurance policy decreases as you repay your mortgage. So while you continue to pay the same price for insurance, it is actually worth less. Traditional term policies retain their value and usually do so with lower premiums.
Beneficiaries: With mortgage life insurance, the beneficiary is the bank; with personal life insurance, you can name your beneficiary. So you (or rather your beneficiary) have the flexibility to decide how you want to spend the money. You may not need it to pay off the mortgage. You could invest the money or just spend it Brewster’s Millions style. In general, however, it means better financial security for loved ones.
portability: Mortgage life insurance is usually tied to your mortgage. If you buy another home or choose a different mortgage lender when you renew, you may have to take it out again. Simple term insurance still covers you regardless of who you have your mortgage with.
Must be analyzed: If you already have life insurance, you may already have adequate (or partial) coverage for your mortgage. Only a proper needs analysis by an insurance advisor will determine this. Your mortgage lender will not bother and always cover the full mortgage amount.
Consolidation of coverage: With private term life you can combine all of your insurance needs (mortgage, income replacement in the event of death, education and childcare, etc.) into a single policy. This saves you money on the hassle and fees for multiple plans. At the bank, you can only cover the mortgage and you will need to take out different insurance policies for the rest of your needs.
Remember, it’s not just an early ending that you need insurance for to protect your mortgage and family. Make sure to consider disability and health insurance in case you cannot pay your mortgage due to serious illness or injury. Most employers offer some coverage for this, but always make sure it is enough for your needs.
If you are unsure whether you have adequate coverage, a good insurance agent or broker can usually tell you everything. Or, even better, talk to us – we will be happy to help you with a free needs analysis.
WealthBar Financial Services Inc., which operates as CI Direct Investing (“CI Direct Investing”) and WealthBar (“WealthBar”), is a full life insurance agent in the provinces of Alberta, British Columbia and Ontario.