Lots of times, mortgage insurance is sold as a quick add-on after you sign the mortgage contract on your new home.   Just like your home and mortgage, Life insurance is a decision that needs to be well thought out.  Most home buyers purchase mortgage insurance through the bank or through their mortgage broker and don’t realize what they are truly buying.

I will share with you 5 reasons why you should NEVER purchase mortgage insurance from the bank. 

1.  Benefits don’t always pay – about 40% of claims are denied upon claim because there is a lengthy questionnaire that is asked when it comes time to claim.  During a difficult family situation, the last thing you want to focus on is qualifying for a payout.   Personal Life insurance is underwritten upfront.  Once the policy is approved, the insurance company is on the hook to payout upon death. 
2. Decreasing balance – does it make sense to pay 50.00 for 300,000.00 of coverage and pay that same 50.00 for 150,000.00 years later?  As you live longer, the coverage is less because your mortgage is less.  All makes sense because you want to pay off your mortgage, however you shouldn’t be paying the same amount of premium.   Life Insurance will cover you for the entire duration of the term. 
   
3. The bank owns the policy not you.  This is a big one because come at renewal time for your mortgage if you choose a different bank to get a better mortgage rate, you lose the mortgage insurance that you originally had.   Life insurance follows you around wherever you go.
   
4. Cheaper – because mortgage insurance is so popular and banks have sold so many of them, the price originally was intended to be lower than life insurance.  Over time, the banks keep increasing their profits and raising the price till the point that Life insurance is now much cheaper than the bank. 
5. The bank gets paid not your loved ones – You want the benefits to go to your beneficiaries not the bank.  If the policy does payout from the bank, the mortgage is covered, however you will family need to fund your children through school, pay bills as a single income earner, or maybe moving expenses as many families relocate this difficult time.  Life insurance pays the beneficiaries, and then they get to decide on how to best utilize the funds.

 
This is an important article as families continue to go to the bank or purchase through their mortgage broker.  As we live in the digital age,  more and more people are getting educated and can research on their own, however most still purchase through the bank.
Here is a video article done by CBC on further information on this topic.

https://www.cbc.ca/player/play/1552939807/
Finally, I want to thank my customers for choosing me as your advisor and allowing me to service you.   If there are friends in family in your network that you know that have purchased mortgage insurance and can use Life insurance as the better option, I’m offering a 100.00 gift card to a company as a referral fee. 

​Kelvin Ng