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LIFE INSURANCE

There is a Better Way... If you're considering a mortgage, you should be aware that the mortgage life insurance offered by your bank or broker is probably not your best option.

Talk to me today about a Personal Life Insurance policy instead!  To get a sense of how much insurance you'll need, you can use the Income Replacement Calculator.

Below, I've provided some information for you on Mortgage Life Insurance as compared to Personal Life Insurance for your mortgage.

With Mortgage Life Insurance... With Personal Life Insurance to cover your mortgage...
NO
Because mortgage life insurance is a type of group insurance, it is owned by the lender - who has the ability to cancel the group policy at any time.
YES
A personal life insurance policy is owned only by you.  Accordingly, you are the only person with the power to cancel or make changes to the policy.
NO
The mortgage lender or financial institution is the sole beneficiary of mortgage life insurance, as well as the owner.  The lender will use the death benefit proceeds to pay down the remainder of the mortgage.
YES
You decide who the beneficiary will be.  In the event of death, your beneficiary can choose to spend the benefit however he or she sees fit.  They do not have to put the proceeds toward paying down the remainder of the mortgage (but can do so if they like).
NO
As the amount of your mortgage decreases, your coverage drops as well.  However, you have to keep paying the same premium, meaning that over time you get progressively less value for your money.

With mortgage life insurance, the death benefit pays only the balance of the mortgage in the event of death.
YES
With a Personal Life Insurance plan, the amount of the death benefit does remain consistent.

So long as you're paying your premiums, the death benefit will always be equal to the face value of the insurance you purchased.  If you purchased $150,000 in insurance, the death benefit will be $150,000.
NO
Should both spouses pass away, the bank or lender will use the death benefit only to pay down the remainder of the mortgage.  Essentially, the death benefit is paid to the lender and the policy owner's family does not receive anything beyond the knowledge that the mortgage is paid off.
YES
The insurance company will pay the death benefit, for both of the lives insured, to the specified beneficiary.  As an example, if both a husband and wife are each insured for $125,000, the total benefit paid would be $250,000.  Beneficiaries can use this payment as they see fit.
NO
Mortgage Life Insurance premiums do not take health into account.
YES
Many companies will offer a preferred rate to you if you are in good health.  Homeowners who are healthy and who have a good family medical history can qualify for significant premium discounts.
NO
If you have Mortgage Life Insurance and you switch lending institutions, you must reapply for coverage.
YES
With a personal life insurance policy, you always own your coverage and it will stay with you. Note that you might need to reapply if you decide after purchasing the policy to increase your coverage.
NO
In the case of bank mortgage insurance, underwriting is done at the time of death.  In some cases, mortgage insurance is offered with minimal background checks.  This can result in major problems if the bank's insurer decides to dispute the claim.
YES
Personal Life insurance policies are underwritten at the time of application.  If approved, you can be confident that the insurance company will pay the claim.  Note that there is an option for the company to contest a claim, during the first two years after application, in the case of non-disclosure or fraud.
NO YES
Most term policies allow you to convert them to permanent products at any time, without the need for a medical exam.
NO
Your mortgage insurance expires once the mortgage is paid off.
YES
Upon paying your mortgage, you can choose to continue, convert or cancel your insurance coverage.
NO
In most cases, no options or riders are available.
YES
You can customize your policy with options and riders such as Waiver of Premium, Accidental Death, and Children's Insurance.
A Personal Life Insurance policy to cover your mortgage is almost certainly the best choice for you!  To get started on this superior alternative to Mortgage Life Insurance, contact me today.


It's the Smarter Choice As you can see, there are many reasons why a Personal Life Insurance policy to cover your mortgage is vastly superior to Mortgage Insurance from your broker or bank.  When you're ready to make the change and get far more value for your insurance dollar, just contact me for a FREE consultation.

Sincerely,

Brian Poncelet, Certified Financial Planner
Brian Poncelet, CFP
(905) 338-7689 (24hrs)
brian@rightinsurance.ca

***Owing to limited resources and time commitment, only people with family incomes of $110,000 or more should call.  (OR $60,000 in RRSPs)