Mortgage Insurance
MORTGAGE LIFE INSURANCE
It pays to compare. Insure yourself, not the lender!
For most of us, obtaining a mortgage is a necessary part of making the biggest financial investment of our lives – buying a home. Most lending institutions offer creditor or mortgage life insurance as part of their lending or mortgage packaging. At first glance, the offer may seem like a good deal. However, there are serious disadvantages to creditors’ mortgage protection insurance compared to a personal life insurance as explained below.
Mortgage Life Insurance - Comparison
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Features:
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Lending institution – Bank or Credit Union
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Independent Life Insurance Broker
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You choose your own beneficiary
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NO – The lending institution is the beneficiary, and upon death of the insured, the proceeds must be used to pay off any outstanding mortgage.
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YES – With a personal individual policy, you choose your beneficiary and your beneficiary can choose how to use the funds.
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You own and control the policy
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NO – You are covered under a group policy owned by the bank. Because the bank owns the policy, you have no control over it.
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YES – You purchase an individual policy owned by you. Because you own the policy, you have complete control over it.
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Coverage is level for the policy term
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NO – The face amount of your policy can only be for the exact amount of your mortgage – no less, no more. The group coverage is always decreasing term insurance, declining as the mortgage declines.
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YES – You may purchase any amount of coverage you require. You may purchase any kind of insurance with permanent or term.
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Coverage is convertible
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NO – Group mortgage insurance is not convertible to permanent coverage.
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YES – An individual term policy may be converted regardless of health, usually until at least age 70.
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Continuation of the policy guaranteed?
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NO – The group policy can be canceled by the bank or the issuing company at any time.
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YES – An individual policy cannot be canceled unless you wish to cancel it yourself.
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My broker/agent offers many policies
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NO – The features and provisions of the lender’s group policy are the same for everyone.
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YES – An independent life insurance broker offers several kinds of policies.
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You have the right to shop & purchase your insurance elsewhere
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YES – The tied selling approach is strictly illegal (making the mortgage offer conditional upon taking the mortgage insurance)
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YES – IT PAYS TO COMPARE!
Contact us for more information.
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