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Are you insuring your mortgage or your life

Your family loves your home – it is the centre of your life together, after all. You did your due diligence and you know it’s affordable and, some day it will be paid off … unless.

What would happen if you pass away? Will your family be able to pay off your mortgage? Of course, you want your family to be able to stay in their home no matter what happens to you.

The obvious solution is life insurance. There are two main types of life insurance: lender mortgage life insurance, and personal life insurance. When deciding which is right for you, do your due diligence; otherwise, you could find yourself locked into life insurance that does more to protect the lender than your family.

Here are the differences…

Lender mortgage life insurance

Personal life insurance

Lender owns the policy.

You own the policy and designate the beneficiary.

Benefits are paid directly to the lender.

Benefits are paid directly to your beneficiary.

Coverage expires when the mortgage is paid off.

Coverage continues after the mortgage is paid.

Pay out only the amount owning on the mortgage at the time of the claim. Total value decreases with the mortgage balance.

Pay the total life insurance coverage amount and the total coverage remains stable for the entire coverage period.

Premiums can be adjusted by the lender at any time.

Premium schedule is guaranteed for the life of the plan.

Lender can change or cancel the policy at any time.

Only you can cancel or make changes to the plan when premiums are kept up to date.

Policy cannot be moved to a new mortgage, a renewal or a new lender.

Plan goes with you from one home to another, and one mortgage to the next.

Your premiums are based on your age and minimal health information. At the time of the claim, accuracy of answers to medical questions may be examined.

Your premiums are based on your age, health, and smoking status.

There’s no doubt about it: Insurance to cover your mortgage is an absolute necessity to protect your home and family. Your professional advisor can make sure you get the protection that is tailored to you, not your lender, and is a perfect fit with your overall financial plan.

Reviewed: May 21, 2015

This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Insurance products and services distributed through I.G. Insurance Services Inc. (in Québec, a Financial Services Firm). Insurance license sponsored by The Great-West Life Assurance Company (outside of Québec). Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.