The Truth About Mortgage Insurance

Posted on November 6, 2007 at 5:54 pm
Filed Under Financial Planning, Mortgage Planning

It scares me to think that many Canadians believe that Mortgage Insurance issued through major banks in Canada is comparable to personally owned life insurance for the purpose of protecting their mortgage.

I have built numerous relationships with a number of Mortgage Broker’s and Clients based on my passion to help Canadian home owners truly understand why owning Mortgage Insurance through their lending institution is a decision that should seriously be reconsidered. Consider the answers to these three questions:

Why would you insure your life with a company who chooses themself as the Beneficiary?
Why would you risk a claim not being paid out by allowing the insurance company to underwrite at claim time, as opposed to when you purchase the insurance policy?
Why would you pay more on a monthly basis for a truly inferior insurance policy with less benefits?

Your Take-Away: If any of the three questions above spark a hint of doubt in your mind, invest the time to do a bit of research and obtain a life insurance quote for the balance of your mortgage. In summary, buying a personal life insurance policy for the purpose of protecting your mortgage provides you with:

A policy that you actually own
Savings of upwards of 25% and more
The ability to choose your own beneficiary
Upfront underwriting, not claim time underwriting

In my opinion, there is no reason that one would consider the alternative option and own their mortgage insurance through their lending institution, and I’m confident that you will come to the same conclustion if you do the research yourself and don’t just take my opinion as fact.

Until next time, have a terrific Tuesday!

Chris

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