CBC Marketplace: In Denial – The Dangers of Mortgage Life Insurance

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CBC’s Marketplace is a penetrating look at consumer misdeeds in Canada, they’ve covered.

But one of the worst stories they ever ran into was mortgage life insurance.

CBC Marketplace In Denial

Here is what one of the banks’ victims has to say about what the bank did to her and her family. Mortgage life insurance leaves whole families destitute and homeless every week.

There were over 260 comments on the story. Here are a few highlights from the comment section:

Oh my, I am sitting here looking at my two young children wondering what my husband may have signed and checked off on the check list with the bank. We just purchased our home in June 2007. He is deployed to the Gulf until May. When he returns home rest assured he will be going to the bank to go over his policy with a fine tooth comb. Until he does, I will have no rest! I am going to call a licensed broker and make an appointment to understand the fine details and the ‘loop-hole’ questions. Thank you so much for this program. I can not rest easy until I know our family is cared for!
I was one of these people who purchased the insurance and did get hurt at work only to be told I lied on my application. I was not sure where to turn. I am disgusted that this is happening to people other than myself. I never even thought about it when it was presented to use and it was not clearly explained. Someone really needs to look further into this.
I too work for one of the 5 big banks, not the one featured in your story, and we are also told how to position life and disability insurance for a sale and our sales targets are very aggressive! Regular meetings teach us how to treat any obstacles we may be faced with in selling this product. We do not have any idea how many of these claims are denied, they only disclose to us the percentage we are required to sell to get our year end bonus (2%) of our salary.
I am a mortgage broker in Nova Scotia. We are offered inducements by major banks to push their insurance products. Others will try to slip it in at the lawyers office. Unlike most mortgage brokers, I and a number of my staff are licensed insurance professionals. Even after explaining why term life is a better, safer, guaranteed to pay product, the lender successfully manages to sell their product to many customers, because most consumers trust their bank. Even when they can’t make their sale at the branch, many continue to nag the client through telephone and mail outs to try to get the sale. The newest hook is critical illness insurance which supposedly pays if you are diagnosed with a terminal illness and pays even if you survive. I tried reading a policy from a lender and I had trouble understanding it and I sell insurance. What I did understand was they covered 5 major illnesses. Our regular policies cover over 20.
We declined the Mortgage Insurance as we decided a few years ago it was better to buy an insurance policy for just over the amount we needed the mortgage for. But when we declined the insurance from TD, the mortgage representative did not stop harassing us and putting fear into us for the rest of our meeting that we were perhaps making one of the biggest mistakes possible. She scared me so much so that she left us alone to discuss it for a few minutes. I was trying to convince my husband that maybe she was right. Thank goodness he stood his ground and we did not buy it.
I remember sitting with our BMO banker going over the mortgage insurance form. I asked if I should answer ‘yes’ to the question about seeing a doctor for a mental disorder, since I had some postpartum depression the previous year. The banker said “Don’t worry about it, just check off ‘no'”.
Do the math, just think of all MILLIONS of dollars in premiums being invested by these Banks since they got into the insurance business – for their own profit – and then have the audacity to deny claims and only refund their paid up premiums. They sponge off others to get rich quick and another reason why their Profit Margins have soared upwards since they got into this line of work. If this isn’t a Scam, I don’t know what is.
I watched your program on Mortgage Insurance and felt like I was living in the past. I lost my husband Bob to cancer December 2002. We had taken out mortgage insurance with the TD Bank just 15 months earlier. Approximately 12 months after taking out the insurance he was diagnosed with cancer and in his remaining months he was under the impression the mortgage would be paid off. He answered no on the health questions so we were doomed from the start. After weeks and weeks of questions, I was getting uneasy whether or not there was a problem, but in the back of my mind I felt everything would be okay as he died from cancer never having this problem previously so there just should not have been a problem. But like your program stated there was never a chance this policy would have been paid.
Thank you so much for airing this program. Last April my husband had a heart attack. We too thought that we had critical illness coverage–ironically through the TD Bank, only to be told that he was denied coverage because he had lied. This has been devastating for us as he had had absolutely no signs of any problems. In fact he has to go in every year and have a physical done because of his job. Nothing was ever said to him by the physican that he had any health issues. I feel that a nation wide lawsuit would be appropriate. If they sell the policy they should be liable.
As an x BMO commercial lender, your story on Mortgage Insurance was spot on. The Banks make an ENORMOUS amount of money from this program. The Bank would regularly push their lenders to ‘sell’ this product. If the Banks are selling it, then I agree with your guest that the Seller should be licensed. I would submit that if the insurance company is collecting the premium, then they have accepted the risk. I was quite uneasy about selling life insurance to my customers and would routinely advise the clients to seek coverage outside of the bank. At least with term life outside of the Bank coverage your premium isn’t supporting a declining balance, with the exception of commercial operating loans. If the Bank makes life insurance a ‘condition of the credit’ which sometimes happens. You can still get coverage outside of the what the Bank is offering and simply sign a form which hypothicates coverage for the loan to the bank
The problem is not that you had a test for cancer, heart trouble or for high cholesterol. We have all had those. The problem is that the complex questions on the application ask for what would be considered ‘routine’ tests and most applicants are thinking in terms of serious health issues to disclose – not routine things. At claim time the insurance company asks for a copy of the provincial health records. Details that were not disclosed are used to prove non-disclosure. The fact that the non-disclosed items are not material does not seem to matter. For insurance purposes, ‘fraud’ includes a sloppily completed application form. For ANY insurance application, disclose EVERYTHING. The insurance company underwriter wants to see something like ‘October 2007, annual medical with Dr. Jones. Blood pressure, cholesterol and urine tests all OK’
Finally, it does not matter that the condition from which you die from is related to the condition in the question. You could die in a car accident and your coverage could be denied if it is determined you misrepresented your health.
I too used to work for the company stated. We were never trained to sell the insurance product. We had goals and if a customer did not take the insurance we had to explain why. The big line was to take the insurance now and check around for insurance through a broker. Full well knowing that most people do not bother after the fact. I am ashamed of what that company made us do in order to meet our goals. We were always told how much was paid out never how much was rejected. No wonder the TD did not want to comment.
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  1. Rick 04/14/2010 at 12:22 am

    I am going thru a really hard time right now with … … It is unbelievable how they operate. I am gathering as much info as I can, from all sources, so as I can take these guys on. I sure wish I knew 6yrs ago, what I HAVE LEARNED IN THE LAST FEW MONTHS…They are a fraud and do not have the right to mislead thier clients in such a way

  2. LSM Insurance 04/14/2010 at 12:55 pm

    Hi Rick,

    Thanks for sharing your story. I hope things work themselves out – please let us know if we can assist further.

  3. Lindsey 02/09/2013 at 9:39 am

    There needs to be a national across the country inquiry to this out and out fraud that is going on. People believe banks are not aloud to take us in and bleeding us when we go in to sign for a mortgage and insurance. This is not right. We need to do something ASAP. Why does it take a TV program to make us see what is going on. Why are Banks allowed to be dishonest and nothing is done about it. Pulling out of TD after 30 yrs.

  4. LSM Insurance 02/09/2013 at 10:50 am

    Thanks for your comments. Part of the problem is when many people sign up for their mortgage insurance they are thinking about their mortgage and the insurance side of things is an after thought.

  5. Patrick K 08/12/2013 at 5:18 pm

    I work for a Canadian insurance company that offers full life insurance products and this report shed a huge light on what we have tried to explain to clients when comparing products. You don’t always get what you paid for. A guaranteed personal policy is the way to go.

  6. LSM Insurance 08/13/2013 at 9:32 am

    Thanks for sharing Patrick.

  7. Christine McCarthy 12/29/2013 at 1:09 pm

    This happened almost 11 years ago to me but I have just found out (3 weeks ago) that I was mislead from a major insurance company. My partner, who was an alcoholic, suffering from depression and awaiting a court date that most likely would have landed him in jail, committed suicide 7 weeks before the “2 year suicide” clause in our mortgage insurance policy. I was denied coverage. I begged, pleaded, wrote letters to the President and Ombudsmen, yet was told I was not entitled. I have recently learned that there are exceptions to these clauses (i.e. I was in the house over 90% of the time of the 2 years) and that this company should have suggested/offered that I seek legal advice, which they did NOT!!!. I have always felt that cases such as these should be assessed on an individual basis, as it is quite obvious he did not commit suicide for the insurance money. If so, do you not think he would have waited 7 weeks!!!!!! I ran out of energy, and was so caught up in grief and despair, I eventually gave up. After all, I had 4 children to take care of and now had a mortgage to pay for on my own, thanks to Canada Life. I am now ready to fight.

  8. LSM Insurance 12/30/2013 at 4:00 pm

    Hi Christine. I’m very Sorry to hear about your unfortunate situation.

  9. Btian Kirley 02/12/2014 at 10:31 pm

    We are facing a terrible “Catch 22” with Canada Trust TD about our mortgage. We have sold our home in N.Saanich for $400K and bought a similar home in Campbell River for $185K. There is a penalty of $7000.
    for paying off our mortgage. We offered to put up liquid collateral, (GIC) or cash in a savings account but they say they can’t substitute security. They would “port” the mortgage, (issue a new mortgage on the new home), but since we are moving we wouldn’t qualify for a mortgage.(No job security, no residence security. In other words, they won’t move our mortgage because we will be new in the area, they won’t let us pay it off without paying a $7000. penalty and they won’t let us keep the mortgage secured with GICs or a savings account in the amount of the mortgage. “Catch 22”

  10. LSM Insurance 02/13/2014 at 12:58 pm

    Sorry to hear that. Unfortunately this is really an insurance question but rather a mortgage question. I hope things work out.

  11. alec 02/13/2014 at 1:13 pm

    Hi Brian,

    That is terrible. There’s a number of things you can do to discourage TD Canada Trust from continuing to abuse your trust and double dipping.

    • file a complaint with the bank ombudsman
    • have a lawyer file a suit (small claims or civil suit for some kind of fraud: have your lawyer pick the right charge, you only need a letter or an initial filing, you will not be following through but you want to put a barrier of expense hassle up for the bank)
    • let the bank know that they will lose your account completely if they persist (be sure to have alternative finance lined up)
    • escalate the issue while taking names: somebody is pocketing that $7000 and the new new loan fee. Embarrass them.
    • put up a clear page which you control (and comments too) about how the bank is taking advantage of your situation
    • everywhere on social media where TD Canada Trust tries to promote their mortgages and consumer solutions, turn up with a link to your page outlining your side of the story.

    It’s important you do all of these things at the same time and consistently. Make it very painful for the bank to ignore and abuse you.

    I hope these suggestions help.

  12. louie hull 03/02/2014 at 12:58 pm

    i feel that mortgage insurance is only government sanctioned extortion. i can insure my vehicle for one year for about 300.00 dollars and get 1,000,000 worth of coverage yet it costs me over 4,000 a year to insure a 250000.00 mortgage something is not right about that

  13. LSM Insurance 03/02/2014 at 1:13 pm

    Thanks Louie. I agree mortgage insurance through the. Snl is not a good deal but you are you properly taking the likelihood of the two risks into account. Premiums are based in large part on the underlying risk.

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