Mortgage Insurance: Why You Should Stay Away From the Bank’s Plan w/ Syed Raza

Posted on January 21, 2011 and updated January 26, 2011 in Insurance Types, Life Insurance Canada News, Mortgage Insurance 2 min read
Syed Raza photo
Syed Raza talked to us
about Mortgage insurance.

When most Canadians sign up for a mortgage, one of the last things they’re thinking about is their mortgage insurance. However, what might seem like a small decision can result in paying thousands, if not tens of thousands, of extra premium dollars over the life of your mortgage.

LSM insurance broker Syed Raza sat down with us to review four reasons why you should consider individual life insurance over mortgage insurance from a lending institution:

1. Bank coverage is bank owned – Syed knows the bank owns the coverage on their in-house mortgage insurance policies. Whereas, an individual life insurance policy is owned by the insured and he or she has the option to choose their own beneficiary.

2. Declining Insurance – With the bank’s plan, Syed warns, you’re paying for declining insurance. Whereas, with an individual policy, the insured has a level death benefit for the life of the term.

3. Post-claim underwriting – Individual life insurance policies complete all of the underwriting in advance. Whereas, with a mortgage insurance policy, Syed stresses that much of the underwriting is done at the time of claim. This dangerous issue is addressed further in the CBC Marketplace series.

4. Coverage is portable. -Syed has some good news. If the insured decides to change lenders, they can keep their individual coverage because it’s not tied to the lending institution.

For more details on mortgage insurance in Canada, you can contact us at 1-866-899-4849, or visit our Mortgage Life Insurance Quote Page.

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tonya
tonya

Can I have a mortgage insurance and a life insurance plan will both pay out. I’m thinking of another $100,000. 43 Non Smoker and good health

LSM Insurance
LSM Insurance

Yes you can have a mortgage insurance plan through a lending institution and a life insurance plan. The premiums for a $100,000 are based on you age nearest age and the type of plan. Term plan starts off lower in cost and go up as you get older. Permanent plans plans start off higher in cost and generally remain level for life.

Karen
Karen

Good points Syed. The lack of portability with this coverage is a key feature many people over look.

LSM Insurance
LSM Insurance

Thanks Karen. Yes clients who sell their home and / or pay off their mortgage and want to keep their coverage are pretty much out of luck.

Ronald
Ronald

How much is $400,000 for a 52 year old male no meds other than hih cholestrol which is well controlled

LSM Insurance
LSM Insurance

Thanks Ronald – the premiums depend on the amount of coverage and the type of plan. Elevated Cholesterol is usually not issue if it is well controlled but could prevent you from getting preferred rates.