Mortgage Insurance vs. Term Life Insurance

Posted on January 5, 2010 and updated November 9, 2010 in Insurance Types, Life Insurance Canada News, Term Insurance 2 min read

Many Canadians sign up for the bank’s mortgage life insurance without fully examining their options. The chart below gives a quick snapshot of the differences. In addition to the benefits listed below you could be paying thousands of dollars more in insurance premiums over the life of mortgage by taking out the banks plan.

 

You can get an instant quote and compare for yourself at our free Term Life Instant Quote Page. You can also call us at 1.866.899.4849 to find out about our cash back mortgage life insurance plan.

 

 

Bank’s mortgage Life Insurance Individual Life Insurance
No discounts on premiums for healthy people. Discounts on your premium, if you are a healthy person with a healthy family history. (Very significant savings for older people)
The older you are, the more expensive premiums are. (in comparison to an individual policy) Over 20 companies competing for your business. Get the best rates available based on your health situation.
Group Policy- No Control. You are in Complete Control.
Policy may be cancelled by the bank. Policy can only be cancelled by YOU.
Non-portable Fully-portable
Non-convertible Fully-convertible (Life portion)
Premiums NOT-Guaranteed Premiums are  FULLY-Guaranteed on most plans.
VOID if mortgage in default. Insured even if mortgage is in default.
LAPSES if property is sold or if you move your mortgage to another bank. Your insurance moves with you.
NOT guaranteed renewable at mortgage renewal date. Automatically renewable to age 85.

 

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LSM Insurance
LSM Insurance

Thanks for the note. The banks mortgage insurance plan is generally a very poor value for the reasons you stated.

The coverage decreasing and most banks price applicants in 5 year age bands so their coverage could be going done but their cost could be going up.

Some additional reasons stated in the above article the coverage is not portable if you move homes or switch banks, the bank is the beneficiary, the coverage is not convertible.

Rikhi
Rikhi

Hi! I have 20 year term insurance for me and wife for $300,000.00 I moved my mortgage to different bank and they wanted me to adopt for life insurance. As I know that I will be paying $35.00 bi-weekly for me and wife on top of my mortgage payment so I cancel it. My calculation says that I will font. Paying premium for same $$ inspire my mortgage amount goes down. Mean that if my mortgage Today is $250,000 and after 4 year it goes down say $190,000 I will be be still paying same premium to insurance but if… Read more »

LSM Insurance
LSM Insurance

Hi Jens,

Thanks for the note. You can cancel the bank’s mortgage without a penalty but you would want to make sure you qualify for a new plan before cancelling the banks plan.

Jens Jorken
Jens Jorken

Would I be able to cancel my present bank mortgage insurance without penalty?

Are your insurance premiums based on my present mortgage balance?

Thank you for your assistance.

LSM Insurance
LSM Insurance

Hi Sara,

Thanks for the note. The premiums will depend on your age, smoking status and the type of plan and options you select.

I will send you a separate email now. Regards … Lorne

Sara
Sara

How much will cost for over $370,000.00