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Why mortgage life insurance may not be the best bet

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s mac

The basis of sound financial planning should come from a client-focused approach based on their needs and personal situation. When working from this perspective there could be a place for creditor insurance, group insurance, etc in addition to individual life coverage. There are pros and cons of each type of coverage and should be viewed as such…they are different and should not be painted with such a broad brush stroke of one being better than the other. Educate yourself on all types of insurance products so you can pass that knowledge on impartially to your clients.

Friday, Nov 24, 2017 at 12:55 pm Reply

Ami Maishlish

Good points. I’d add that the perceived “ease” in being approved to pay premiums is inversely related to the cost of the perceived coverage. (sometimes people confuse approval to pay premiums with the perception of acceptance to be insured; however, that’s another topic…)

The general public can use the free resource at http://www.winquote.net for market overview and pricing. Best, however, is to consult with a knowledgeable, licensed and LifeGuide-equipped advisor. The value difference can be substantial while the cost for the increased value in individual rather than creditor group insurance may likely be substantially lower.

Friday, Nov 17, 2017 at 11:16 am Reply

John Page

I had an insurance license for about 40 years. Notice I had (past tense). I believe that as it says above… mortgage default insurance or CMHC insurance, protects a lender if a homebuyer who makes a down payment of 5% to 19.99% can’t pay the rest of the mortgage. But, you can not cancel this insurance.

If the bank says you can cancel it, it is likely declining term insurance. Replace it.

However, everyone is jumping in with D/I insurance,C/I coverage, etc. May I suggest that if an independent qualified planner is involved, prescribe a comprehensive financial plan designed to achieve all their goals and objectives.

You can charge a fee for this. When explained properly, people will gladly pay to have all of their affairs integrated.

Friday, Nov 17, 2017 at 10:54 am Reply

Kerry Knudsen,CFP

One other very important type of insurance to attach to a mortgage is Critical Illness coverage. Furthermore, if a person discovers there is a premium for some form of life or health insurance embedded into their mortgage payments, is to first apply (and be approved) for coverage privately, where you can establish beneficiary designations to your family first, but do not terminate the bank coverage until the new policy is issued and in force. Kerry Knudsen,CFP , Spectrum Financial, Winnipeg

Friday, Nov 10, 2017 at 10:38 am Reply