It is no doubt that a home is going to be the largest purchase you make in your life, so it would be prudent to say that you should protect that asset with Mortgage Life Insurance. The purpose of Mortgage Life Insurance is to pay off the balance of the mortgage in the event that you or your spouse die before the balance is paid off. But are you using the "old" type of mortgage insurance or the "new" type of mortgage insurance?

The "old" way of buying this valuable protection meant, that the banker would ask a few simple questions on an application, and then have you initial beside, here, here, here and here!

Did you ever really read those terms that you were signing beside? Probably not. Now if you did, I congratulate you, it means that you are truly worried about the possibility of this event happening, and what would happen to your home and your family if you were no longer here to provide for them.

But here's the "new" way of buying this valuable protection, I will show you 5 reasons WHY you want to own this protection personally, instead of through the Banks Creditor Insurance Policy.

1. Once you have applied for your own personal policy, you are able to move your mortgage from lender to lender upon term renewal, without ever having to worry about applying for Insurance again. This is very important, as you are always getting older, and you risk the chance you will not be insurable in the future at renewal time, so you are forced to stay with the Bank who owns your coverage whether you like them or not, or potentially risk having no insurance on your new mortgage.

2. You choose the beneficiary of your policy, which is usually your spouse. In a mortgage life insurance policy owned by the bank, the bank is the beneficiary, not your spouse. This is very important, because the surviving spouse may not have financial freedom, simply because the mortgage is paid off. As by bank rules they only can lend you a mortgage between 32-38% of your monthly income, so that means that 62% of your bills still need to be paid. By having one lump sum payment directed to the spouse instead of the lender, will give you the opportunity to do whatever you need with the money, and as you see above may not be to simply pay off the balance of the mortgage.

3. Does your "old" policy cover you in the event of a major illness and not just death? Our family finances can be devastated by a heart attack, stroke or cancer as well. In fact more mortgages default because of sickness or injury, than they do death. So it is important to look at the "new" way of protecting your asset, instead of the easy "old" way the banks make it for us.

4. Your "old" policy is worth less and less every time you make a mortgage payment. See the bank policies are declining balance policies, so as your mortgage balance reduces, so does the valuable protection for your family. Meaning if you have an original balance on a mortgage of $200,000, and you pay and pay for all the years of the 25 year term and unfortunately pass away in the 20th year of your mortgage, the balance that would be paid off would only be about $25,000. But here's one more kicker, the cost of the insurance never goes down with the balance amount, so the policy effectively becomes more expensive the longer you own it. By owning your own protection, the balance remains level throughout the entire term...

5. Your policy is fully underwritten at the time of application. This means that the insurance company, and ourselves as your agent, will do all the necessary steps to make sure that when you are given a policy, it is an ironclad contract in regards to the payout of the insurance. I am sure many people have heard stories of a husband passing away, and when the wife went to claim the insurance, she found out there was no insurance or the deceased had not been properly guided through the application process, so no claim would be paid... This is a result of many banks underwriting the policies after the person has passed away, a common practice of Creditor Insurance. See the link below, as CBC did a special exactly on this topic, and you will be shocked by the results...

There are so many reasons even beyond what I have explained above, but the above points are the most powerful. You cannot leave this valuable protection in the hands of a Loans officer, as there only job is to protect the assets of the Bank. It would be more prudent to work with a Licensed Insurance Broker to protect you and your family from any of life's unexpected events, its our business, and it's always our pleasure.

And here's that link...

Watch CBC Marketplace – “In Denial” - This segment from CBC Marketplace on February 6, 2008 provides you with concise information about bank mortgage insurance and the reasons for consumers to purchase their insurance through a licensed broker.

Click here for the video