5 Reasons Mortgage Insurance
From The Bank Is NOT Right For You
You did it. You’ve just finalized the biggest purchase you’re likely to ever make and bought your first home. Insurance for this kind of investment is always a good idea. The bank will undoubtedly offer you some kind of insurance, but did you know you have options in choosing the type and where you can get it?
The bank will most likely offer you their most convenient or bundled insurance policy and simply adds it onto your mortgage payments. This convenience, however, often comes with big costs.
The reality is, you can choose where to get your insurance anywhere you wish, and often with a more favourable policy, and at a cheaper price. The banks understandably don’t usually inform you of your outside options.
Many people are simply not aware that there are straightforward and easily accessible alternatives to a bank's credit-life insurance. If you contact any financial advisor, they will most likely tell you that mortgage-life insurance through a broker is going to end up being the better choice for 5 main reasons.
1. You don’t actually get the full amount paid out from the bank
With bank-owned insurance, your coverage is tied to the mortgage balance and continues to decline as you pay it off. The longer you have your policy, the less it’s worth. For example, If you took out insurance on a 300k mortgage and paid off 160k when your claim was made, you would only receive the remaining 140k as a payout.
With mortgage-life insurance, your coverage remains the same throughout your term, and is not tied to your remaining mortgage balance. If you’ve signed a 300k policy, you will be paid 300k no matter how much of your mortgage remains. Even if the entire mortgage is paid off, you will still receive the full amount.
2. You could save money on premiums
The bank-owned insurance premiums are generally more expensive and will often continue increasing in cost throughout the policy term. Mortgage-life premiums are generally cheaper and are guaranteed to not change for the length of the policy.
You can also choose to decrease your premiums as you pay off your mortgage and pay less or keep it the same. Either way, you will pay less than you would through the bank.
3. You will pay more if you decide to move
Credit-life insurance through the bank is not portable from one house to another; you have one policy per property. If you move, you'll have to cancel that policy and apply for new insurance. You'll be starting from the beginning, paying new policy fees and premiums that are most likely going to be higher.
With mortgage-life insurance, your policy stays with you regardless of the address of your property or if you change lenders. You can move, add properties, refinance or change lenders while keeping the same coverage.
4. It is not REAL Insurance
You shouldn’t be concerned that your pre-existing conditions will put your claim at risk. Mortgage-life policies not from the bank require the underwriting medical process be completed before approval, ensuring they have all the relevant health and history information before you sign. That means there are no surprises when a claim is made, and guarantees it will be approved. If you have good health, you may also be eligible for reduced premiums.
The banks do their underwriting only after death, and only at this point will they do an investigation to determine whether they should have insured you or not in the first place. That means you can pay premiums your whole life and payouts are NOT GUARANTEED. How crazy is that?
5. You don’t even OWN your policy
With credit-life insurance, the bank owns and controls your policy. They name themselves the beneficiary of the insurance rather than your chosen family member. The money is only used to pay off the mortgage, and that’s it.
With mortgage-life insurance, you are in control. You decide how much your policy amount is, how long the term is, and where the money goes. Money gets paid as one sum and can be used by the chosen beneficiary to pay off the mortgage, or go to any other expense such as a funeral, loss of income, moving costs, or to invest it elsewhere.
These are just a few reasons why mortgage-life insurance is the superior choice over the bank owned credit-life insurance. Insurance is important when purchasing a property, and you should be aware of the options you have. A trained and independent insurance broker will assist you with choosing the right insurance type to protect your family.
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Why Worb Financial?
Custom Solutions Tailored To Your Needs
We do not believe in a "one-size fits all" approach to Insurance, and will always bring you the best options for your unique situation... Even if this means recommending another provider.
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We are a small team of dedicated professionals who treat each and every client like they are family. No matter what, we will help you understand your options and most importantly the importance of life insurance.
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Licensed in Manitoba, Ontario, and British Columbia so we can serve you best no matter where you are.
LIFE INSURANCE
Life is unpredictable and amazing. We have the skills and knowledge to help you discover the best options and coverage.
EMPLOYEE BENEFITS
We’ll assess your companies needs and help you pick the right coverage to keep your staff happy.
FINANCIAL ADVICE
While you may have an idea of where you want to invest your money, it’s our job to know.
CRITICAL ILLNESS INSURANCE
Health risks are real, which means it’s important to be covered and prepared. While it’s not ideal to think about, it is important.
About Blair
Blair Worb
Blair Worb, Worb Financial’s CEO and owner, has been practicing life insurance for over 27 years and opened Worb Financial in 2000. Blair tenaciously seeks the best solutions and solves problems for his clients. He assists individuals, groups, and small businesses, providing employee benefits consulting for companies ranging in size from 3 - 100 employees.
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