Mortgage vs Life Insurance
Working in the insurance industry, I have seen too many families being unaware of the dangers of mortgage insurance. Insurance is a complicated topic and the mortgage professionals who sell these products are usually not trained or licensed to sell life insurance. I strongly recommend that you do your homework and deny any insurance offered by your mortgage lender.
The biggest issue with insurance from the bank is that they have post claim underwriting, which basically means that the underwriting will be done after a claim has been submitted. Technically you could be declared uninsurable after you have submitted a claim and your claim denied. If you purchase it directly from your insurance agent, all underwriting will be done before the policy is issued. Therefore you know your claim will be paid out when needed according to the terms of your contract, unless fraud can be proven.
Other issues with Mortgage Insurance
- Beneficiary is the lender. With life insurance, you select the beneficiary.
- Insurance amount decreases with your mortgage, but premiums stay the same. With life insurance, your coverage and premiums remain the same.
- Not transferable to new lender.
- Payout can be used only to pay the mortgage.
- Cannot change policy if situation changes. Policy can be modified as needed.
Speak to a qualified insurance advisor at Harlow Financial to determine the appropriate insurance coverage for your family.
A great story that CBC Marketplace ran on this topic titled In Denial , worth checking out! Thanks for your time if you have any questions, just ask Harlow Financial.