Your Mortgage Insurance Might Not Protect You!
Does it matter where you buy your mortgage insurance? Absolutely! You could be paying for coverage you don’t even have, or paying for a premium on your full mortgage when you only owe half! Assumption Life’s Better Mortgage Insurance will ensure you are fully covered, without any surprises.
What you need to know:
When you get your personal mortgage insurance through Better Mortgage Insurance instead of lenders such as banks,
1. You’ll be fully underwritten at the time of the application with no surprises when/if you make a claim
With other lenders, they may only check to see if you are qualified for the insurance once you have to make a claim. You’ve been paying your premiums for x-amount of years with the threat of not actually being covered!
2. You choose the beneficiary and they choose how to use the benefit
With other lenders, they own your policy so they are the beneficiary.
3. Coverage stays the same
Depending on your age and health status, you may not even qualify for new mortgage insurance if you change lenders or even possibly if you renew with your current lender.
Assumption Life’s Better Mortgage Insurance includes:
• Term Life Insurance designed to cover temporary needs such as the repayment of a mortgage should you die.
• Disability Insurance provides a monthly benefit to cover part of your income should you become disabled
• Critical Illness Insurance pays a lump sum benefit should you suffer from a critical medical condition
7 Reasons why you should not purchase mortgage insurance from a bank or some lenders
1. If you die or become disabled, your lender gets the payout, not your family
Even though, if the claim goes through, mortgage insurance guarantees that the mortgage payments will be taken care of if you die or become disabled, it’s not always necessary to use the lump sum payout to pay off the mortgage. Your survivors may actually prefer to sell the house, or to use the money for other purposes while paying the mortgage. Mortgage protection insurance through your lender means a payout will go to the mortgage lender, not to you or your family.
2. They may underwrite after the fact
Imagine your beneficiary needs to make a claim after your passing. When they go to make the claim, they are informed that you were not actually covered. The underwriting process should be completed before your insurance policy is issued, however, some lenders, such as banks, may go through the underwriting process after the claim has been made. Underwriting after the fact is illegal in some provinces, but not all. If there are any inconsistencies found between the records and the forms used to apply for the coverage, the claim will be invalid. A simple mistake made on an insurance application can be considered fraud and the consumers are held responsible for the information provided. In the end, the coverage you thought you had (and paid for) never existed and the insurance provider will claim it’s your fault. Learn more about it here.
3. The payout from mortgage protection insurance shrinks with your mortgage
Policies like this only cover outstanding debt, therefore the payout gets smaller while you’re paying off your mortgage. Insurance premiums, though, will stay the same through the insurance term. This means you’re spending unnecessary money. You’re doing what you are supposed to by paying down your debt, yet your cost of insurance stays the same making it feel like you’re being penalized for something.
4. Higher premiums after renewing
With mortgage protection insurance, your policy will have to be renewed at the end of your mortgage term and you may not pay less even though your outstanding mortgage balance has decreased. You may pay more because you’re a little bit older.
5. Bank staff are not licensed insurance agents
They are “mortgage specialists”, unlicensed and rarely have insurance training; they’re often not qualified to explain details and legalities. A licensed agent, however, would be able to tell you you’re eligible for this type of insurance before you start paying premiums, instead of after disaster strikes!
6. Mortgage insurance protects the lender, not you
It saves them in the event that you can’t pay your mortgage. If you can’t pay, the lender gets the house; they are always protected. Mortgage protection is a double up.
7. Your life insurance may already cover you
If it does, your payout will stay the same through the term of the policy and there are no strings attached. If you had a $400,000 mortgage and took out a policy for that much, your beneficiaries would still receive $400,000 even if your mortgage was paid in full before the claim was made. Life insurance is also generally much cheaper- it could cost you half as much.
If you’re unsure of your coverage, whether your policy has been underwritten, or want to ensure you and your family are 100% covered, we can help. Contact us or visit Assumption Life’s Better Mortgage Insurance for a free quote.
Unsure of the meaning of certain terms in this article? Visit our list of Insurance Terminology.
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