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THE DANGERS OF MORTGAGE LIFE INSURANCE!!!
Signing up for the Mortgage Insurance offered by your bank or mortgage broker may be the worst financial decision you ever make!
SAY NO TO YOUR BANKS MORTGAGE INSURANCE!.. Make sure you watch the disturbing investigation on CBC'S MARKETPLACE to find out why!
MORTGAGE INSURANCE: continued
MORTGAGE INSURANCE vs LIFE INSURANCE
Hopefully you’ve read the first page and watched the CBC Marketplace video on the dangers of Mortgage Life Insurance offered by your bank or mortgage broker. Just to makes sure you clearly understand all of the disadvantages, we’ve put together the following comparison between Mortgage Life Insurance from your bank or broker vs. a Personally Owned Insurance Policy from a Licensed Insurance Agent:
1. DECLINING DEATH BENEFIT vs. LEVEL DEATH BENEFIT:
Bank/Broker - Your coverage amount (or death benefit) is decreasing every month to match your mortgage balance, even though your monthly premiums will always stay the same. Example…If you and your spouse purchased $300,000 of Mortgage Insurance coverage say 20 years ago, your payout amount today if something happened to both of you would only be the outstanding balance on your mortgage ( approximately $50,000 ) even though your premiums stayed the same for the last 20 years.
Insurance Agent – Your coverage amount will never change unless you decide to change it, regardless of what your mortgage balance is. Example…If you and your spouse purchased a Term Life Insurance Policy 20 years ago, your monthly premium for $300,000 on EACH LIFE would be less expensive than the banks $300,000 single payout of decreasing Mortgage Insurance. So if something happened to you and your spouse today, the payout amount that would be left to your beneficiaries would be $600,000. Furthermore, if something happened to only one of you the payout would be $300,000, and the other spouse would still have their own insurance policy for another $300,000!
2. NO CONTROL vs. ALL THE CONTROL:
Bank/Broker - The Mortgage Insurance Policy is owned by the bank and automatically names itself as the beneficiary which means the payout can only be used to pay off the outstanding mortgage balance. Mortgage insurance premiums and benefits are also not guaranteed, and can be changed or cancelled by the lender at anytime. The bank has all of the control.
Insurance Agent -The policy is owned by you and/or your family, which means you choose the beneficiary, and they can then decide exactly what they would like to use the death benefit for. Life insurance premiums and benefits are always guaranteed for the life of the policy, and only you can cancel or make changes to your policies. You and your beneficiaries have all of the control.
3. NO FLEXIBILITY vs. LOTS OF FLEXIBILITY:
Bank/Broker – Your Mortgage Insurance Coverage will not transfer with you if you were to switch your mortgage to a new bank for a better interest rate, without having to qualify again – which means you risk not qualifying again if your health had changed.
Insurance Agent - Your insurance policy will never change and can never be taken away from you regardless of where you may take your mortgage.
4. EXPENSIVE PREMIUMS vs. DISCOUNTED PREMIUMS:
Bank/Broker – Mortgage insurance from your bank or broker is part of a group insurance policy where smokers and non-smokers pay the same blended rates. There’s also no rate difference if you’re in excellent health.
Insurance Agent - Insurance rates are based on each individual applicant’s age, health and smoking status. Less expensive preferred rates are also available for applicants that are in better health than the average individual.
5. APPROVED LATER vs. APPROVED NOW:
Bank/Broker – The underwriting for Mortgage Insurance is done only at the time of a claim, which means you’re paying for a policy that you don’t know for sure will pay out. This gives the bank a chance to deny the claim in the future any way they can. (see the investigation done by CBC Marketplace)
Insurance Agent - The underwriting is done upfront for a personally owned insurance policy when you submit your application. This ensures that the policy is properly underwritten and approved so you can be 100% confident that it will pay out in the future.
6. NO CHOICES vs. LOTS OF CHOICES:
Bank/Broker – You only have one type of coverage option for mortgage Insurance which can only be used for insuring the balance of your mortgage, no more or no less. Once your mortgage is paid off your coverage ends with no options of keeping the coverage or converting it to a different policy.
Insurance Agent - You can choose from several different types of life insurance options, and choose any amount of coverage that you like, regardless of your mortgage balance. You always have the option to decrease or increase your coverage, or convert it into a permanent insurance policy at anytime depending on your specific needs.
At F1RST CHO1CE Financial Group we’re passionate about sharing our knowledge, experience and unbiased opinions with families that are looking for a trusted advisor to help them with their Insurance options.
ANY QUESTIONS?…Contact a Licensed Insurance Advisor today!