Insuring your mortgage – what kind of insurance is best?
You’ve worked hard to find the right home, and it’s a huge expense. You want to have the right protection should something affect your ability to make your mortgage payments.
People often assume this protection must come from their lending institution. This isn’t true. Before you say “yes” to lender provided mortgage insurance, consider your options. Protecting your mortgage with an individual life insurance plan can offer you better guarantees, greater choice, and in many cases can save you money.
Here are some of the differences between individual life insurance and lenders’ mortgage insurance.
With life insurance, your coverage continues after the mortgage is paid. You will always receive the total value of the insurance plan you purchased. And your premiums are guaranteed for the life of the plan.
With mortgage insurance, the coverage expires when the mortgage is paid off. The total value of the coverage decreases with the mortgage balance, so it pays out only the amount owing on the mortgage at the time of your claim. And, the bank can change, cancel, or adjust the premium at any time.
Also, you own the policy and designate the beneficiary with life insurance. With lenders’ mortgage insurance, the bank is the owner and beneficiary of the death benefits.
With life insurance, your plan goes with you from one home to another. With lenders’ insurance, you may not be able to transfer it to a new mortgage or upon renewal, and you cannot take it with you to a different bank.
With life insurance, your medical history is reviewed before the policy is issued. With lenders’ insurance, your eligibility is assessed after you make a claim, and it may be determined you aren’t eligible for a payout, if, for example, a pre-existing medical condition was overlooked.
When you purchase insurance, it should be an integrated component of your overall financial plan. Talk to us – we can work with you to design a plan that is the best fit for you.