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Mortgage Insurance

BANK OWNED INSURANCE VERSUS PERSONALLY OWNED INSURANCE

Mortgage-InsuranceWhen you apply for a mortgage with a bank, credit union, trust company, or mortgage broker you are offered mortgage insurance with your mortgage. The lender is required to offer you mortgage insurance, but you are under no obligation to buy their group mortgage insurance. You have the option to opt out of your lender's mortgage group insurance and purchase your own insurance policy.

The most affordable coverage is term life insurance. Term life insurance provides maximum protection at the lowest cost. Term life insurance is best suited for one’s temporary insurance needs like a mortgage. You also have the option to purchase permanent insurance. You can choose a term to 100, whole life, or a universal life insurance policy. The premiums for permanent insurance are higher initially but are substantially lower in the long run.

The other types of policies one needs to purchase for their mortgage are critical illness and disability insurance. A critical illness or disability is the number one cause of foreclosures in Canada. They go hand in hand, a critical illness will lead to a long term disability leaving you and your loved ones with the financial burden and additional stress during your most vulnerable times. Losing one’s home due to a disability or a critical illness is devastating for one’s family. In Canada it is estimated that 50% of all foreclosures are due to a disability. Protect yourself and your family by purchasing critical illness and disability insurance, don’t become a statistic. You worked hard for your home, don’t become a victim of your lender. 

Avoid the bank's critical illness insurance.

Avoid the bank's life insurance.

Here's why you must say "no" to the bank.

The following comparison explains the difference between the protection offered by banks, credit unions, trust companies, and mortgage brokers versus personally owned insurance.

 

Personal Mortgage Insurance:

Insurance with a Bank or Mortgage Broker:

1.

You own your policy it’s a unilateral contract. You are the only one who can change or cancel your policy.

1.

The policy is a group policy and is controlled by the lender, who is the owner. The lender's insurer can cancel their group policy leaving you without any coverage.

2.

Your policy stays the same and the premium is guaranteed for the term of the policy regardless of how many times you refinance your mortgage or change lenders. Once approved you don’t need to qualify for the policy again.

2.

With most lending institutions your policy terminates when you refinance your mortgage. You will need to re-qualify medically and pay higher premiums.

3.

The policy is underwritten when you apply for coverage not at time of claim.

3.

The policy is underwritten at time of claim. The only thing you qualify for at time of application is to pay the premiums. If the lender changes their insurer for their group policy you may not qualify with the new insurer even though you qualified for the original policy. 

4.

 

Discounts on premium for a healthy person, you could save as much as 75%. Savings would allow you to pay of your mortgage faster saving thousands in interest.

4.

 

No discount on premium for a healthy person.

5. 

Term life insurance offered by most insurance companies is renewable and convertible.

5. 

Not guarantees to be renewable or convertible.

6. 

Premiums are guaranteed when the policy is issued, they remain the same for the duration or the term of the policy.

6. 

Your premium can increase depending on the claims experience of the group by the lender's insurance provider.

7

You choose the amount of coverage. Maximum sum insured can be higher than your mortgage.

7. 

The amount of coverage is equivalent to the amount of your mortgage balance.

8. 

The amount of coverage doesn't decrease unless requested, in which case the premium decreases proportionally.

8. 

As your mortgage balance decreases the amount of coverage (life, critical illness, disability) decreases proportionally with most policies, although the premium remains the same.

9. 

You can choose your beneficiary or beneficiaries.

9. 

The lender names itself as the beneficiary.

10.

You can keep your coverage after mortgage is paid off.

10.

Coverage terminates after you pay your final mortgage payment.

11. 

Your only obligation to keep your coverage is to pay your premium.

11. 

Any default on the payment of your mortgage is also a default on your insurance premium. With the majority of lenders after a default of 90 days your mortgage insurance coverage is cancelled.

12.

 

Critical illness insurance can be part of your coverage and can cover up to 25 illnesses or conditions.

12.

 

Critical illness insurance offered by lenders typically covers only three or four basic illnesses or conditions.

13.

 

Disability insurance can be part of your coverage.

13.

 

The majority of lenders no longer offer disability benefits with mortgage insurance. Lenders have terminated this coverage due to high claims. Disability is estimated to account for 50% of all foreclosures in Canada.

14. 

Your insurance coverage is fully portable wherever you move, or if you change lenders.

14. 

Your coverage may not be portable even with the same lender. If you switch lenders it is cancelled.

 

15. 

The majority of term life insurance policies are renewable and convertible to permanent insurance even if you are no longer insurable.

15. 

There is no option to convert your policy to permanent insurance.

16. 

The policy is underwritten before the policy is issued.

16. 

The policy is underwritten at time of claim, this is now illegal in some Canadian provinces.

17. 

You can purchase a disability waiver rider with your policy. This rider will pay your insurance premium in the event you become totally disabled.

17. 

There is no waiver option available on mortgage insurance with lenders.

18. 

Coverage can be in force with the payment of your first premium and/or a conditional insurance receipt or temporary insurance coverage receipt.

18. 

Please read fine print to see when the effective date of the coverage is in force. It may be the date the mortgage is approved or the closing date.

19. 

The insurance policy is in force for the duration of the term of the policy. 

19. 

The majority of policies terminate at age 65 leaving you uninsured.

20. 

You own your critical illness policy, it's a unilateral contact. You are the only one who can change or cancel your policy.

20. 

The policy is a group policy and is controlled by the lender, who is the owner. The lender's insurer can cancel the critical illness policy leaving you without any coverage.

21. 

All of Stone-Hedge Financial Group Inc. insurance brokers are licensed professionals that are trained and qualified to provide insurance advice.                                                                                                                                    

21. 

Loans officers are not licensed insurance brokers. They cannot, by law, provide you with insurance advice as they are not trained or qualified.

 Contact Us for a Mortgage Insurance Quote


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