Buying Your First Home?
Here are 5 Things To Know About Mortgage Insurance
The purchase of your first home is one of life’s biggest milestones. Your mortgage is likely to be the biggest loan you ever take out, and the stakes are high to keep on top of payments.
When you commit to this kind of investment, you want the protection of a good insurance policy. Insurance will give you the peace of mind to know that in the event of untimely death, your partner (or family) is well protected from financial debt.
You might not have put much thought into your insurance before. When your mortgage application is approved, the bank asks if you want to purchase their credit-life insurance. You’re already there, and are told insurance can be easily bundled into your monthly mortgage payments. Before you say yes, you should know the options you have.
Check Out Our Video On Tips For First-Time Home-Buyers
While insurance is usually required if you put down less than 20%, the type of insurance you get is up to you. Mortgage-life insurance through a broker offers many significant advantages over the bank-owned insurance, and is usually the better choice for first-time homebuyers. Here are 5 important reasons why.
1. Your coverage does not decline as you pay off your mortgage.
With bank-owned mortgage insurance, the longer you have your policy, the less it’s worth. For example, if you take out insurance on a 300k mortgage and pay off 160k when your claim is made, you will only receive the remaining 140k as a payout.
With mortgage-life insurance, your coverage is not tied to your remaining mortgage balance. If you sign a 300k policy, you are paid 300k no matter how much of your mortgage remains. Even if the entire mortgage is paid off, you still receive the full-insured amount.
2. You’ll pay less in monthly premiums
Credit-life insurance premiums tend to be more expensive and can increase in cost throughout the policy term. Mortgage-life insurance premiums are almost always cheaper and are guaranteed to not change for the length of the term.
3. If you move, your policy moves with you
Credit-life insurance is not portable from one house to another. If you move, you have to cancel your policy and apply for new insurance. You then need to re-apply and likely pay new policy fees and higher premiums.
With mortgage-life insurance, your policy stays with you regardless of the address of your property or if you change lenders. You can move as many times as you like, and your coverage moves with you.
4. You get GUARANTEED coverage
If the unexpected happens, the bank determines if you qualify for insurance AFTER death. In their investigation, they may determine you weren’t eligible for coverage at the time of death, and deny your claim. That means you can pay premiums your whole life and a payout is still NOT GUARANTEED.
Mortgage-life insurance requires the underwriting medical process to be completed before approval, ensuring they have all of your relevant health information before you sign. Approval of your claim is guaranteed, with no surprises. If you have good health, you may be eligible for reduced premiums.
5. You (not the bank) own your policy
With credit-life insurance, the bank is the sole beneficiary of the insurance rather than your chosen family member. The money is only used to pay off the mortgage, and that’s it. Paying other expenses such as funeral costs, loss of income, and moving costs, is not an option.
With mortgage-life insurance, you and your family control where the money goes and how it’s spent.
These are just a few reasons why mortgage-life insurance through a broker is the superior choice over banked-owned insurance for first-time homebuyers. A trained and independent advisor will assist you with choosing the right insurance type to protect your spouse and family.
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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.
Our Team
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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