What type of insurance is best for my mortgage?
Upon obtaining a mortgage, life insurance is an afterthought for many. Most borrowers simply purchase the credit insurance offered by their bank or lender.
At Vertuity, we work with insurance experts to offer our clients options that will better suit their needs. There are a few disadvantages to credit insurance, namely:
- Most contracts are underwritten at death, which means that the claim may not actually be paid out at death.
- Every time you switch lenders or refinance your mortgage, you may need to apply for new insurance coverage.
- As you age, your premiums will increase and if you have experienced health issues you may become ineligible for coverage.
- Most consumers choose to explore their mortgage options at renewal, and credit insurance can inhibit you from being able to switch lenders
Term insurance is a great option for insuring your mortgage. In most cases, the cost is similar to credit insurance, however the benefits are much greater.
- Your policy is underwritten upfront, meaning the coverage cannot be taken away from you as you age or should you encounter health problems
- The policy is not tied to your mortgage so you can refinance or move your mortgage to a different lender and always have that policy to cover the debt
- As you pay down your mortgage, the benefit of your credit insurance decreases as the policy only pays out the remaining mortgage balance at time of death. With term insurance, your benefit remains the same so the policy will pay out the original amount of insurance obtained.
There are other reasons to look beyond credit insurance as can be seen in the following report which aired on CBC:
Click here to watch an episode of CBC Marketplace, discussing mortgage insurance
To discuss your insurance needs with a professional please fill out the form below