I'm asked all the time.
The question of mortgage insurance is discussed with every real estate transaction that involves financing.
I embrace the topic because of the multitude of options available to the homeowner; the products are many and a good Realtor should be informed when discussing the topic. I'm very well informed of the pros and cons with purchasing this insurance through your Lender and very proactive in helping my client's choose the right product.
Each situation and every client's circumstances are unique and I hesitate to offer a coverall opinion of mortgage insurance. The post below is a good discussion on the issue but as always, I offer all my clients and their referred friends and families, an opportunity to discuss this with me at any time.
Please do not hesitate to ask... it's always a good feeling when I can help.
Mortgage Life Insurance in Canada is often confusing. Most mortgage insurance purchases are sold through lending institutions and the insured often pays little attention to the plan as he or she is focusing on their mortgage. When you purchase this type of insurance through your lender you are basically taking out a decreasing Term Life policy. The payments increase on a five year span even though the value of the policy drops as your mortgage drops.
Instead of this sort of insurance, have a look at individual life insurance which is certainly more premium friendly.
You are able to combine life insurance and debt protection with this type of plan or you can alter it to suit your debt needs. If you choose to combine the two, it is a answer to both issues, as a result making better financial sense. This kind of scheme taken out for a mortgage debt can be either Permanent or a Term policy. Term insurance plans are fixed for a declared term, such as a 10, 20, or 30-year term. In contrast, Permanent plans are not taken out for a fixed period, but for the lifetime of the policy holder, with the benefit of having a level monthly charge. Permanent plans can also build a cash amount and can be paid up in a limited total of years.
Lorne Marr, life insurance quote professional from Markham, identified 5 advantages you could expect to have if you took out individual life insurance:
- A change lenders or change properties you do not have to start over again, this policy can be portable to reflect the change.
- The covered individual picks the beneficiary, rather than the lender.
- The benefit is twice the amount if both parties died.
- One can combine Term and Permanent insurance needs under one plan.
- If you are lucky and have finally paid off your mortgage debt, then you still have the added advantage of being able to continue with the plan.