Mortgage Life Insurance
Do I purchase my
mortgage insurance coverage at the bank?
Watch CBC
Marketplace - "In Denial" - This segment from CBC
Marketplace on February 6, 2008 provides you with concise
information about bank mortgage insurance and the reasons
for consumers to purchase their insurance through a licensed
broker.
Click here for the video.
When most
Canadians are signing the paperwork for their mortgage, part
of the process is for your banker to ask you to consider
using the bank's mortgage insurance to cover the balance of
the mortgage in the event of death. So, for the
sake of convenience, you sign the application to use the
bank's insurance to fulfill this need.
It's simply smart
business and economic sense to cover your debts with life
insurance, but is using the bank's mortgage insurance the
best way to do so?
The
following table shows a cost comparison between 3 of Canada's
largest bank's mortgage insurance plans versus owning a
personal life insurance policy.
Male & Female
- both age 37, non-smokers in good health
Mortgage
amount - $250,000
Life Insurance Coverage - $250,000 on each
person for a total of $500,000 of level coverage
Bank Insurance Coverage -
Decreasing term coverage which pays the balance only
| |
Monthly Premiums |
|
Bank of
Montreal |
$75.00+ PST |
|
RBC Royal
Bank |
$72.50 + PST |
|
Scotiabank |
$80.00 + PST |
|
TD-Canada
Trust |
$80.00 + PST |
|
Personal
Life Insurance Policy* |
$49.57-
No PST |
*
20-Year Level Term Insurance at Standard Health Rates with
Manulife Financial as of January 14, 2008. Rates are subject to change without notice.
E. &.O. E.
In the following
table, we'll show you the difference in features and
benefits between using the bank's "convenient"
mortgage insurance versus using a personal life insurance
policy to cover your mortgage. Be sure to
obtain a quote
for your mortgage insurance and
contact us to apply for
your best solution for mortgage insurance.
| |
Bank
Mortgage Insurance |
Personal Life Insurance to cover your mortgage |
|
Does the
Death Benefit Remain Level? |
NO
As your
mortgage decreases, so does your coverage. But
your premium stays the same. So as your coverage
decreases, your cost per $1,000 of coverage increases
The death
benefit will pay only the balance of the mortgage upon
death. |
YES
The death
benefit of a personal plan remains level for as long as
you own the plan unless you decide to decrease the
coverage.
The death
benefit will be whatever the face amount of insurance
that has been purchased. |
|
Am I the Owner
of the Policy? |
NO
The bank has
total control over your coverage and can cancel it at
any time |
YES
You own the
coverage and are the only one who can cancel it.
Any changes to the policy can only be made by you, the
owner. |
|
Can I choose the
Beneficiary of the Policy? |
NO
You have NO
choice as to who the beneficiary is when you purchase
the bank's mortgage insurance. |
YES
You have the
choice of whoever you want to name as beneficiary of
your life policy. Upon death, your survivor may
choose not to pay the mortgage off immediately as there
may be more attractive investments other than paying off
the mortgage. |
|
Will the Death
Benefit pay for both my spouse and me in the event of a common disaster? |
NO
In the event
of a common disaster (ie. of a husband and wife are both
killed in a car accident) the bank will pay the mortgage
balance only. |
YES
When using
personal insurance, the insurance company will pay a
death benefit on both of the lives insured. For
example, if a husband and wife are covered for $150,000
each for their mortgage, the benefit would be $300,000
versus whatever the balance is on the mortgage at the
bank. |
|
Is the coverage Portable? |
NO
If you want
to move your mortgage to another institution, you will
have to reapply for mortgage insurance. This will
then be purchased at your new attained age at a higher
premium, assuming you are healthy enough to qualify for
the coverage. |
YES
No matter
where you have your mortgage, your coverage will stay
with you. You do not need to worry about
re-qualifying for coverage. You would only have to
prove insurability if you needed to increase your
coverage. |
|
Is the
Underwriting done at the time of application? |
NO
When using
the bank's insurance, underwriting of the insured will
be done at the time of death. In this way, more
problems than not can arise as the bank's insurer will
try to dispute the claim. |
YES
Using
personal coverage, the underwriting is done at the time
of application. So in the event of a death, the
insurance will pay the claim. The company does
have the option of contesting in the first two years
after application in the event of fraud or
non-disclosure. After two years, the claim will be
paid promptly. |
|
Is the insurance plan Convertible? |
NO |
YES
If you
require, you can convert your policy to a permanent plan
of insurance if the term policy has this feature (almost
all do). |
|
Is the premium exempt from
Provincial Sales Tax? |
NO
PST is
added to the premium as it is group insurance. |
YES
PST is
NOT payable on personal coverage. |
|
Can I
Continue the coverage
after the mortgage is paid? |
NO
The day your
last mortgage payment is made, your mortgage insurance
terminates. If you die the next day after paying
your mortgage, no benefit is paid. |
YES
When your
mortgage is paid, you have the option to continue the
coverage, convert the coverage or cancel the coverage.
The choice is totally yours. |
|
Are there
any other Options
and Benefits available? |
NO
There is no
option to add any additional benefits or riders |
YES
Various
options and riders are available to add to your coverage
such as Accidental Death, Child Term Rider, Disability
Waiver, etc. |
|
Premiums |
Compare your
current mortgage insurance premium with that of a
personal insurance plan.
Click here
to obtain a quote from over 25 of Canadian Life
Insurers. |
|
Value |
After
reading this comparison, decide for yourself who you
would rather have in control of your mortgage insurance
coverage....the bank or YOU! |
The
following table shows a cost comparison between 3 of Canada's
largest bank's mortgage insurance plans versus owning a
personal life insurance policy.
Male & Female
- both age 37, non-smokers in good health
Mortgage
amount - $250,000
Life Insurance Coverage - $250,000 on each
person for a total of $500,000 of level coverage
| |
Monthly Premiums |
|
Bank of
Montreal |
$75.00+ PST |
|
RBC Royal
Bank |
$72.50 + PST |
|
Scotiabank |
$80.00 + PST |
|
TD-Canada
Trust |
$80.00 + PST |
|
Personal
Life Insurance Policy* |
$49.57-
No PST |
*
20-Year Level Term Insurance at Standard Health Rates with
Manulife Financial as of January 14, 2008. Rates are subject to change without notice.
E. &.O. E.
Our quoting
service is provided by an independent third party company
which gives you access to the major Canadian Life Insurance
companies all in one place.
