Mortgage insurance is designed to cover your mortgage if you die during the term. The premium doesn’t change, because it has been averaged out over the life of the policy. These policies are generally on the cheaper side as these have decreasing death benefit over time. This means that the benefit decreases in accordance with your mortgage loan. There is really no difference between a term life insurance policy and a mortgage insurance policy. Mortgage insurance is a term life policy, simply one that is chosen to coincide with your mortgage.
You can buy an individually owned term life insurance to coincide with the amortization period of your mortgage and the mortgage balance. This means that you don’t have to buy something that is called mortgage insurance to cover your mortgage,. For example, if you have a 25-year mortgage you can purchase a 25-year term mortgage insurance policy that covers the amount owed on your mortgage, ensuring that family left behind will be able to pay off your home and continue to live there. MONEY BACK OPTION is available too. You will get back the premium paid by you if the amortization period is over and the mortgage is paid off.
.How is our plan better than bank’s mortgage insurance? When you apply for a mortgage, your mortgage lender might give you the option to apply for mortgage insurance. It may seem convenient. But before you say yes to the lender, take a moment to understand your options. Protecting your mortgage liability with an individually-owned insurance offers you better guarantees and choices.
Have a look at the following differences between our plans and lenders' mortgage insurance plans:
| # | Features | Our Plans | The financial Institute's Plans |
|---|---|---|---|
| 1 | Do non-smokers pay much less? | Yes | No, smokers and non-smokers pay the same rate |
| 2 | Who owns the policy? | You, The Insured | The lender |
| 3 | Who receives the death benefit? | Designated Beneficiaries They decide how to best use the funds |
The benefit goes directly to the lender |
| 4 | Does the insurance remain in force if I change lenders? | Yes | No |
| 5 | Who can cancel the policy? | Only You, The Owner | The lender can cancel the coverage at any time |
| 6 | Are the premiums guaranteed? | Yes, Your Premuim stays Constant | As long as you don't switch banks or refinance your loan |
| 7 | When does my coverage end? | At the end of the term of the plan but you have the option to renew the term | Upon full repayment of loan, refinancing, changing lenders, at age 65 to 75 (depending on lender), or cancellation by lender |
| 8 | Can I convert this insurance to a permanent plan? | Yes | No |
| 9 | How many critical illnesses does my plan cover? | Choose up to 25 | When offered, generally only 4 |
| 10 | Does my critical illness plan allow me to use the money to pursue treatments not available in Canada? | Yes, You may use the proceeds as you see fit | No, the proceeds only pay off your mortgage |
| 11 | Can I receive professional and expert insurance advice? | Yes | No |
| 12 | When is the policy underwritten (processed & approved)? | Before the policy is issued | After your death. Your policy may be declined at that time! |
After going through the above comparison, you can now decide how you wish to protect your family.
You can even choose to buy a level term insurance policy which is generally not much more expensive and keeps the same death benefit over time. You can simply carry a term life insurance policy with the value you need for the death benefit.
