Before you say yes to mortgage insurance, consider a product designed to protect you and your loved ones – not your lender.
Mortgage financing is probably one of the largest financial commitments you will make in your life. It’s natural to want to protect that commitment for your family in case of death, accident or illness. All too often, people assume this protection has to come from their mortgage lender, but you should know you have other options. Using a personal insurance plan instead of mortgage insurance can offer you and your loved ones better guarantees, greater choice, more flexibility – and in most cases at a lower cost.
Here are 6 great reasons to choose personal insurance instead of mortgage insurance:
- With personal insurance, you own the policy and designate the beneficiary. The benefit is paid directly to your beneficiary. Alternatively, your lender is the owner and beneficiary of mortgage insurance. The benefit is paid to them.
- Your personal coverage doesn’t decrease and can continue after the mortgage is paid off. However, with mortgage insurance, you are covered for only the declining balance as you pay down your mortgage, while continuing to pay the same premium. Once the mortgage is paid off, your coverage expires.
- Only you can cancel or make changes to your personal insurance plan. Your premiums are guaranteed for the life of the plan. Your lender, on the other hand, may change the premium or cancel a mortgage insurance policy at any time.
- Your coverage stays with you if you move. Personal insurance goes with you from one house to another and one lender to another, but you may not be able to transfer mortgage insurance to a new mortgage or lender.
- Your coverage is confirmed when you apply for personal insurance; your medical history is reviewed before the policy is issued, so you can be confident that the coverage will be in place when needed. In contrast, mortgage insurance may assess your eligibility only when you make a claim, leaving you unsure of your coverage.
- Personal insurance can be customized to your needs. You work with a licensed insurance agent who can offer expertise and personalized service to design a plan for your specific circumstances. For example, you may need more or less coverage than the amount of the mortgage balance. You may want a combination of term and permanent coverage. These options don’t exist with mortgage life insurance, and lenders are not licensed to give any advice on insurance.
It’s important to note that if you already have mortgage insurance, it’s not too late to look into personal coverage. Contact me today to see how personalized insurance advice fits into your overall financial plan.
Shannon MacDonald, B.Sc.(Econ), CFP
Investors Group Financial Services Inc.
Office: (613) 591-7639
400 MARCH ROAD
KANATA ON K2K 3H4
Insurance products and services distributed through I.G. Insurance Services Inc. Insurance license sponsored by The Great-West Life Assurance Company.
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