What you need to know about bank mortgage insurance

CBC Marketplace – In Denial – Bank Mortgage Insurance Exposed

Just say “No” to the bank insurance offer and speak to one of our licensed life insurance advisors. We have access to all types of life insurance products designed to protect your mortgage at the lowest rates.

Ask yourself these questions when you got a mortgage

  • Are you surprised to learn of the above video? Does any of this cause you concern?

  • Do you think the bank or your lender offered you anything close to the best value with such an easy tacked-on sale at your mortgage closing?

  • Do you recall the pressure of signing up for the mortgage and creditor insurance by your bank or loan officer?

  • Do you feel the bank person knows mortgage insurance well enough? Do you believe it was explained to you properly?

  • If you purchased it, do you feel you had enough time to review what was offered?

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Life insurance is the right way to protect your mortgage

Protecting your family while carrying a large mortgage debt can be straightforward if you know your options. Below, you can review and compare important reasons for owning proper life insurance where your family is the beneficiary, not the bank’s mortgage insurance.

We make it straightforward for you to obtain life insurance quotes from a wide selection of Canada’s top insurance companies. To view instant quotes, complete the form you see on this page with your mortgage amount and do a quote for your spouse or partner. On average, we can help you save up to 40% when compared to bank insurance. There are also additional discounts for couples and healthy people when applying for life insurance. The banks don’t offer these because they are not insurance providers.

 Term life insurance is often cheaper

Bank mortgage insurance is expensive

  • The coverage amount stays the same

  • Declining coverage based on the balance

  • Discounts on your premium if you are healthy

  • No discounts on healthy people premiums

  • Get the best rates based on your own health

  • The older you are, the higher the premiums

  • You are in complete control of the policy

  • Pooled policy – No control

  • The policy is owned by you and not the bank

  • The bank owns the policy

  • Fully transferable when you switch lenders

  • Non-transferable

  • Premiums fully guaranteed for the term

  • Premiums not guaranteed

  • Insured even if the mortgage is in default

  • Void if mortgage in default

  • Portable when moving to your next home

  • Lapses if the property is sold

  • Fully convertible to permanent coverage

  • Not guaranteed at renewal

  • The policy is renewable to age 75

  • Plans expire at age 70 or earlier

Real-life story and the value of proper planning

One person we know found this out the hard way. Her husband suffered a heart attack, and when they renewed their mortgage, she claims she told the person doing the paperwork of her husband’s heart attack. She was asked to sign here and initial there – most people have experienced this with a bank.

When he died four months later, the bank’s insurance provider (that’s right, the bank is not your life insurer, another company is, so now you have to deal with a company you have never dealt with before) investigated and declined the coverage. They stated that she had signed that there had been no change in her or her husband’s health – one of those initials she was asked to do.

However, had the person making the application heard her comment, or if she had read what she was signing and not signed, the bank would not have issued the insurance in the first place, so either way, her husband could not get insurance. Had he been covered by a life insurance policy, first, he would have had his rates guaranteed for ten or more years, depending on the term. He was also guaranteed to renew the policy regardless of his health but for a higher premium. Which insurance do you want?

Term life insurance is inexpensive and it works

So having determined that you want traditional life insurance to protect your mortgage balance, there are several choices. The primary one is term insurance, where the monthly premiums are guaranteed for a fixed period, 10 or 20 years are the most common, but longer terms are available.

When you purchase a ten-year term policy, then in ten years, we will broker a new policy to cover the mortgage balance at that time. If you still have your health, we can usually do it for about what you are paying for the first ten years as the principal to cover is often less, having paid some of it off. If you are no longer insurable, then the guaranteed renewal rate is higher as they assume the only reason you would renew is that you are uninsurable, but at least you can still purchase it. Interestingly, many people end up renewing without first getting a new quote or policy, which could save them hundreds of dollars each year.

Those who do not want to take the risk of being uninsurable in 10 years and having to pay a significantly larger premium on renewal opt for a 20 year or longer-term, which will usually see their mortgage essentially paid off. They pay on average about 20% to 30% more in the first ten years for this security.

We also have access to three companies that offer decreasing coverage term insurance designed to save money by reducing the coverage to mirror the reduction of your mortgage balance. Make sure to ask one of our agents about this option.

Mortgage Protection Tips

So what does all this mean to you?

It is simple, let the lender do what their specialty is, lending you money to fulfil your homeownership dreams but then say “No” to the offered insurance. We recommend you turn to us and work with one of our licensed life insurance advisors to provide you with the best-brokered solutions. Your needs are unique so do your health, lifestyle and medical history, so it is essential to work with us to help put together a proper plan to protect your mortgage and family. Start by getting some quotes; leave the rest to our advisors to guide you.

Some clients may also purchase a small critical illness policy as part of their mortgage protection plan, which will pay a lump sum if they contract a critical illness. Purchase enough to cover the mortgage payments for a year and help with extra expenses such as the spouse’s lost wages if they take time off work and travel costs, including accommodation, travel and parking expenses. Typical coverage amounts are about $50,000 for this purpose.

If you do not have disability coverage at work, some clients also purchase a disability policy for the monthly payments, including taxes. The coverage is significantly better than bank mortgage insurance. There are several ways to keep the premiums down. Talk to us.

We also have access to the total protection bundle that offers life, critical illness and disability insurance combined as a package. It is well priced and is available from several insurance companies.

Mortgage Protection Bundle
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All product names, trademarks, and trade names are the property of their respective owners. The Insurance Council (BC, AB, SK, MB), Financial Services Commission (ON), Chambre de la Sécurité Financière (QC), The Superintendent of Insurance (NB, NL, PE, NS) are the provincial and federal authorities that regulate, supervise and enforce standards for life insurance professionals.

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