Looking for a mortgage insurance? We can help.
Buying a home will likely be the largest purchase you make in your lifetime, which is why protecting it should be a key part of your overall financial plan. For this protection, chances are someone has suggested you buy mortgage insurance. But before saying ‘yes’ to mortgage insurance, consider increasing your existing term life insurance coverage instead (or buy a term insurance policy if a friend has referred you to this information). Term life insurance, as an alternative to mortgage insurance, is often a money-saver and usually has features not commonly found with a mortgage insurance policy.
What is mortgage insurance?
Mortgage insurance, also known as creditor insurance, is offered by most banks and lending institutions. It is an insurance policy that pays the balance of your mortgage to the lending institution if a person listed on the mortgage passes away.
What is term life insurance?
Term life insurance is an insurance policy that pays a death benefit if a person listed on the policy dies. The money can be used to pay off a mortgage, other debts and help with the day-to-day expenses of the surviving family members.
To help you further understand some of the distinctions between mortgage and term life insurance, we’ve compiled a list of some of the most common questions we hear and answered them.
|Frequently asked questions||Mortgage life insurance||Term life insurance|
|How much insurance coverage can I get?||The amount of your coverage is determined by the amount of your mortgage.||You can choose any amount of coverage.|
|Who receives the death benefit from the insurance policy?||The mortgage lender is the beneficiary and receives the death benefit.||The beneficiary you have designated (whether a family member, friend of organization) receives the death benefit.|
|If changing mortgage lenders, does the policy stay in force?||No, usually you will have to get, and qualify, for a new mortgage insurance policy.||Yes, you own and control the policy.|
|Does the policy stay in force if I sell my home and buy another?||No, usually you will have to get, and qualify for, a new mortgage insurance policy. This could be a deterrent given that many people end up buying 2 or 3 homes over the course of their lifetime.||Yes. Your term life insurance policy stays in effect for the duration of the term, regardless of how often you move. Your policy will stay in force so long as your premiums are paid and you wish to maintain the coverage.|
|Will I always have the same amount of coverage?||No, as you pay off your mortgage the amount of coverage decreases as well.||Yes, the amount of coverage you have chosen will stay the same for the term of the policy. You can opt to increase or decrease your coverage at any time. If you choose to increase your coverage however, you will have to re-qualify.|
|What happens to my coverage once my mortgage is paid off?||Without a mortgage there is no mortgage life insurance coverage.||Your coverage will continue for as long as you want to renew the coverage or until you choose to cancel.|
Protect your family from more than just the costs of your mortgage – get more with term life insurance
While mortgage insurance pays your mortgage in the event of your death, a term life insurance can be used for so much more:
Final expenses, like income tax and funeral expense
Mortgage payments and other outstanding debts
Offsetting the loss of your income to your family’s budget
Investing to secure future income
The fact is there are so many more considerations for life insurance than just covering your mortgage. If you are buying a home consider increasing your term life insurance coverage instead.
We can help you compare the rates, features and options of getting, or increasing your existing, term life insurance coverage to the mortgage policy you already have, or are considering. KTX Financial brokers are available to answer your questions and provide guidance and can be reached toll-free in Canada at 1.888.922.8422 or 416.591.9996 locally.
Don’t forget you can compare quotes online too! Compare rates from multiple companies for term life insurance policies that provide coverage anywhere from $50,000 up to $2,000,000—ensuring you get only the coverage you need while making sure all your families needs are met.