Insuring My Mortgage with Mortgage Life Insurance
By :Canadian Health Coverage
Have you purchased a home and considered insuring it with Mortgage life insurance?
Perhaps the most important investment for many Canadians is their home. The fact that you purchased something that puts a roof over your family means so more of the things you value can materialize. Whether it’s having more room for your growing family, starting a small business, a place to celebrate with family and friends the reasons are endless.
The reality of home ownership though also may make some of us concerned because of the financial burden as it relates to your expenses. Questions such as how would the mortgage be paid if a spouse passed. Many Canadians won’t be surprised to know a mortgage reliant on dual and sometime a single source of income carries with it the inherent risk that the home may slip into default and displace the family should one of the income earners passed away. Whenever this happens like many times death occurs families may rally, Friends show sympathy and after grief is expressed the task of arranging the funeral costs and settling the estate begins. Preparation of this is probably one of the most procrastinated matter in some families financial matters. While its easy to see why it has the potential of hindering the family’s stability and in many cases affect what you may want for your next generation’s future. Imagine for a moment a family that are currently planning a child’s education based on savings from a portion of each pay cheque, or the
The Banks Mortgage Insurance Policy is owned by the bank and you are part of a group plan. What this means is your policy is owned by the bank and therefore they are the beneficiary. When you pass away with the banks mortgage insurance your life insurance will pay to the bank the outstanding balance on your mortgage, nothing more nothing less. So while the house is paid off your family wouldn’t receive money for a funeral, for credit cards etc.
Mortgage Insurance isn’t portable. What this means is should you decide after your mortgage term is over to shop around for a new lender, a new insurance is necessary. At this time your health may deem you ineligible and as well your age is older so then your rates will reflect that by being pricier.
Mortgage Insurance has no cash value. Any premium dollars that you pay out doesn’t build up over time in an investment account like many life policies . Why is that necessary, well the main reason this is good to have a cash value should you in the future suffer a lapse in employment or are just tight on funds and need to pay your life insurance will pay the premiums and stop the policy from lapsing. This cash builds up in the policy tax free and can go towards paying for premiums until you’re able to restart monthly payments.
A bank mortgage insurance policy is underwritten at them time of claim. With a Personal life insurance plan you will be underwritten at the time of application. This means that if you were to make a claim on a bank owned policy you will have an extra step to payout the policy.
With a bank owned policy after you pay off your mortgage your life insurance is no longer in affect, you can’t transfer it to a permanent policy. While an individual policy you can start with a term policy for instance and later on convert your policy to a permanent policy.