The Importance of Protecting Yourself & Family
Buying a home is the biggest investment that most people will make in their lifetime. Besides the responsibilities that come with home ownership, a greater need to keep yourself and family protected is established.
When you review the information at the bank, mortgage insurance may seem like a good option as you think the mortgage would be paid. But is this really the best option for you?
With life insurance, it’s about protecting more than just your home, but those that are the most important in your life. Individual insurance provides more control as you own it. You choose the product, the options, and you decide who gets the life insurance death proceeds.
With the bank, they own the benefit, and will pay down the mortgage only…if you qualify at time of need. With life insurance: Your family will decide how the money is used, which offers more options to possibly invest the funds at a much higher rate than the mortgage rate is at.
The following is a comparison between the key attributes of life insurance and mortgage insurance:
On a life insurance program: you choose the length of time for your life insurance coverage, you decide the coverage amount, and who will benefit if you were to pass away unexpectedly.
Mortgage insurance: you are covered for the mortgage amount only. The amount decreases as your mortgage is paid down, the coverage amount is decreasing but the monthly premium payment remains the same.
You can choose between life, critical illness, and disability insurance with different product options and optional benefits, which allows you to decide based on your current and evolving needs. All products can be purchased separately when you are purchasing your insurance.
With regards to mortgage life insurance, you have limited options. It only lasts until you’ve paid off your mortgage. The critical illness and or disability insurance is normally a bundle you have to choose with the mortgage insurance, which also only work to cover the mortgage.
Control on the policy:
You own and control all the decisions on your life insurance policy. It’s unrelated to your mortgage.
The lender owns your policy so you can’t move your mortgage insurance to another lending institution. If you find a better rate for your mortgage, you will have to re-qualify for mortgage insurance and your premium may increase.
Your life insurance medical underwriting is done at the time of the application. When the insurance company approves your coverage, you will be covered, with no further need to worry about heath effecting the benefit.
Mortgage insurance medical underwriting is done at time of need, meaning when you die. If you had a pre-existing condition the insurance might be declined, and your premiums may be refunded.
When mortgage is paid off:
Your life insurance policy is not tied to your mortgage, so the coverage stays active until you decide to cancel it.
When you stop paying the mortgage with the bank, your insurance stops.
There are several great features with life insurance, critical illness, and disability insurance, and we can help you find the perfect coverage to meet your needs. Read more here and contact us today!