Do you know that you don’t need to accept mortgage insurance from your Bank or Lender?
When you own a mortgage, you are often offered a mortgage protection plan by your lender. This is a plan that insures your mortgage against your death and pays the outstanding balance should you be unable to.
These plans seem attractive and convenient, but there are many reasons that you should look to life insurance instead to cover your mortgage.
| Mortgage life insurance offered by bank/lender | Term life insurance |
Who benefits from your coverage? | They are the beneficiary the life insurance proceeds are used to pay off the mortgage. | You name the beneficiaries, typically family members, who are free to use the money as they see fit. |
When does the coverage expire…and what happens after? | You name the beneficiaries, typically family members, who are free to use the money as they see fit. | You choose the term of your policy, and can also choose to convert it to a permanent life policy at expiration. |
What happens if I move my mortgage? | Insurance offered by a lender is not transferrable. If you move your mortgage to a new lender, you must resubmit for insurance. This may result in rate changes. | Your insurance stays unchanged for the term of your policy. |
If I die…what then? | The coverage applies to the balance still owing on the mortgage. If you die and $10,000 remains on your mortgage, that’s the amount that will be paid. | Your beneficiaries get the full amount of your policy. |
What if I get sick and can’t work to pay the mortgage payments? | In most cases, mortgage insurance from a lender offers optional disability insurance, which would cover your mortgage payments. | Disability is not covered by a life insurance plan. |
Do my premiums change? | The premiums remain unchanged for the term of the mortgage. | Premiums could change at the end of the term, according to your age or health issues. |
*Table source: www.coverme.com/blog
Your house is likely your biggest investment and your home is your greatest asset. It makes sense to find the best solution for you and your family.
