Yes or No to Mortgage Insurance
Setting up a mortgage is a fairly standard part of becoming a new home owner these days. A feature that is usually offered when you are setting your mortgage up is mortgage insurance. In its simplest form, it is a life insurance policy that will pay off any remaining balance left on your mortgage, should you happen to die before it has been paid off. This might sound like a wise idea, but before you commit to purchasing mortgage insurance, you should know that it comes with a few flaws, and you have other options, that we feel are better. I would like to start by mentioning some of the issues that can come up when purchasing mortgage insurance through your lender.
The policy will only insure you for the amount of your mortgage. Your coverage ends when the mortgage is paid off, leaving you with no life insurance and nothing to show for the premiums you have paid.
Also, mortgage insurance coverage is not guaranteed. The lender can change or cancel the policy at any time.
Another issue is that the lenders do not underwrite until the time of death which means they reserve the right to deny claims based on your medical history.
Lastly, mortgage insurance is provided through group plans, so you pay the same rates as the general population (which includes both healthy and sometimes not so healthy individuals). Due to this the premiums tend to be higher.
Our suggestion is to protect your mortgage with an individually owned term insurance plan. A Family Term insurance policy offers you and your loved ones better value and more flexibility at a lower cost! Before you say yes to mortgage insurance, consider speaking with us. We will help to ensure you and your loved ones are protected – not your lender. If you already own mortgage insurance, this is not a problem. We can still offer a full review of your current life insurance plans, and see if there is a better option, that is guaranteed to protect your family, provides you with better flexibility and control of the policy and ensures that you have the right amount of coverage. Please know that one benefit that you still have with a mortgage insurance policy is the option to cancel your mortgage insurance plan, if something better is available, but please speak to us before you take any action.