Mortgage Life Insurance 

Whether you're buying a home for the first time, or refinancing an existing mortgage, someone has probably suggested you purchase mortgage life insurance. But don't rush into buying a policy until you've looked at all the possibilities. You could end up saving money and getting added life insurance coverage at the same time by purchasing a term life insurance policy instead.

What is mortgage life insurance?

Mortgage life insurance, also known as mortgage insurance or creditor insurance, is offered by most banks and lending institutions. It is a life insurance policy that pays the balance of your mortgage to the lending institution if a person listed on the mortgage passes away.

How does term life insurance cover your mortgage?

When you purchase a term life insurance policy, you take into account all the money your family will need in case you are not around to help out. This includes your mortgage payments.

Mortgage life insurance vs. term life insurance

Depending on your age and health, the premiums on mortgage life insurance can be much higher than what you would pay for a term life insurance policy. Take a look at these comparisons for $250,000 coverage:

* Based on the information available in March 2008 from the websites of two major Canadian banks.

**Based on the best rates available for joint coverage (male and female non-smokers) in March 2008, using the LifeGuide® Term Life Insurance quote comparison service. Original rates are shown in annual premiums. For comparison purposes we have shown these annual rates as their monthly equivalent. * Remember though the least expensive Insurance is not always the best solution *

Never buy mortgage insurance at your bank!

REASON #1
While the monthly premium is generally locked in at the rate per $1000 according to the age of the older insured person, the amount of the payout shrinks as the mortgage is paid down. What does this mean for you? The cost of mortgage insurance becomes very expensive as every week passes! With our low-cost solution, upon death your beneficiary receives the full amount of coverage. And yet the premiums remain very competitive to the banks! If you are over 30 years of age and a non-smoker, your premiums just can't be beat by the banks!

REASON #2
When you die, the bank receives the proceeds. You cannot assign anyone else, including family members, as beneficiary. In contrast, with our solution, you appoint a beneficiary who can use the proceeds in whatever manner he/she wishes. If it is wiser to invest the proceeds rather than pay off a low interest mortgage, the beneficiary has the choice. If your family does decide to pay off the mortgage, they can keep the balance of the proceeds.

REASON #3
Any change to a mortgage document -- refinancing or a change of address, for instance -- opens the door to collapsing the mortgage insurance agreement with the bank. You are then required to reapply for insurance, and rates increase with age upon renewal. If your health is poor at that time, the application may be turned-down, leaving you with no protection. With our solution, your protection is guaranteed for the full length of the term, regardless of any change in your health, and is completely independent from any changes made to your mortgage, including refinancing or transferring the loan to any other lender.
Mortgage life insurance is marketed with a specific need in mind - that of paying off a major debt like a mortgage. The amount of your mortgage life insurance may represent only a part of your overall family responsibilities. Call deGraaf Financial Services and speak with us to determine if you are overpaying for protection, or to determine if you are protected appropriately.

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