Things you need to know
Congratulations on your new home! Most Canadians get a bank mortgage and if you are one of them you have probably been convinced that mortgage life insurance is sufficient. But if you read the fine print, there are significant gaps in coverage that could leave you underinsured, which is why it’s a good idea to consider a separate Mortgage Insurance policy.
An affordable and flexible insurance solution designed in your best interest
- Because a bank mortgage life insurance policy is a type of No Medical insurance, it is often lax in ensuring medical questions are answered correctly and assessments are made only after death. This means that if you have a medical condition and answered one of the questions incorrectly, your claim may be denied.
- The payment under a bank mortgage insurance policy is payable to the bank to discharge the mortgage. There is no flexibility to make the payment to your beneficiary and let them decide how to handle the bills.
- Because the amount of coverage under the bank mortgage plan is equal to the mortgage amount, it decreases in step with your mortgage.
- If you change your mortgage lender, you will need to re-apply for the life insurance coverage and could end up paying a higher premium.
- Bank mortgage insurance often costs more than other insurance policies that are designed to meet your specific needs.
In other words, a bank mortgage insurance policy works great for the bank – but may not be in your best interest.