When your lender offers you mortgage insurance…Who are they really protecting?
A mortgage is the single largest debt most Canadians will ever assume. Most consumers will take the time to shop around for good interest rates and terms that suit their needs, but not everyone bothers to do the same for the accompanying mortgage insurance. Below are some basic differences between bank-offered mortgage insurance and a term-life insurance solution.
|Bank Offered Mortgage Insurance||Term Insurance|
|Will the proceeds of your policy go to your choice of beneficiary?||No, your mortgage provider is the beneficiary.||Yes, you can choose your beneficiary and they can use the proceeds for any of their needs.|
|Does the death benefit remain the same?||No, bank mortgage insurance only covers the outstanding balance of the mortgage. The benefits decrease as you pay off your mortgage, though the cost stays the same. ||Yes.|
|Will your client’s insurance cover off other debts?||No.||Yes. Your family can use the tax-free death benefit for any purpose.|
|Are your rates guaranteed for the life of the policy?||No, the bank can change the rates at any time.||Yes.|