Mortgage Bank Insurance Vs. Term Life Insurance
Are you a homeowner with a mortgage? If you are you probably have some sort of Mortgage Life Insurance, or maybe you have Term Insurance, or perhaps you have both? Do you actually know what you are paying for? You might not. Most people don’t know and that’s okay!
Did you know that replacing your existing Mortgage Life Insurance with traditional, trusted Life Insurance can be easy and might save you money and headaches!
When you get a mortgage at the bank they hand you a package of papers to sign that might be taller than you. Let’s face it… you are so happy and over-joyed you’ve just bought a new home, yay… that you may not realize you just bought Mortgage Life Insurance.
Did you know that Mortgage (Bank) Life Insurance only covers you while you have a mortgage and if you die the bank gets your money (since the bank owns the Policy). It is protection you pay to cover the bank’s interests. It decreases as your mortgage is paid off but your premiums stay the same. So you are just paying to protect the bank, you may get nothing out of this type of coverage because they don’t even do the underwriting when you buy it, so in the chance you die; they will do the underwriting then and could find reasons not to pay out.
Instead, you can re-allocate your money and get more from it!
Did you know that you can replace your Mortgage Life Insurance with Term Life Insurance and you will own the policy, it will probably cost you the same or less, but you own it which is the most important! When you die, your loved ones get the money, (not the bank), and they can do whatever they want with it. For example; they can choose to take the money and pay off the mortgage or they can pay off some higher interest loans, and/or pay for your funeral and estate expenses….whatever they want, whatever is best for THEM.
Check out this video from CBC Marketplace – CBC takes a deep dive into mortgage insurance, looking at what really goes on when someone decides to purchase mortgage insurance from a major Canadian bank. Posing the important question everyone should ask themselves about mortgage insurance, “How much are you really covered?”
Here is a chart we created for a quick reference to see the difference between the two types of insurance.