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Mortgage Insurance Explained !

You're buying a house and taking out a big loan to pay for it. Now, the bank is asking whether you want life insurance.
Reluctant to leave an unpaid debt when you die, you say yes. Within minutes, your application is approved and the cost is added to your mortgage payments.
For lenders, life insurance is an easy sell. They suggest it at a time when you're vulnerable and have yet to do any comparison shopping.
And they make you sign a waiver form if you say no, agreeing not to hold the lender responsible if something bad happens to you.
Most people don't realize that the life insurance sold by mortgage lenders is different from the policies sold by life insurance agents and brokers.
It sounds like a great deal at the time, but mortgage life insurance can be more expensive than insurance sold separately.
Before you sign up, you should Contact us at Churchill.

There are other key differences between mortgage life insurance sold by banks and term life policies sold by insurance agents and brokers:

Underwriting: The group insurance offered by banks is a one-size-fits-all product. Smokers and non-smokers are lumped together in the same age category. Individual insurance is based on the client's own medical condition. Most Insurers offer Preferred Underwriting. This means that if you are healther that the averge person of your age and there is no medical history in your family of poor health, you may qualify for better rates. This can be substancial and save you more money.

Portability: If you change banks when your mortgage is up for renewal, say after the first 5 years, you will have to reapply for coverage at the new lender. This means submitting new medical evidence and paying rates based on your current age(5 Years older - that can be a significent increase in premium). Suppose you have been diagnosed with diabetes since you took out your mortgage. Your new mortgage lender may not want to insure you.

Level premiums: You may pay $100 a month for the bank's mortgage insurance, but the amount owing on your loan goes down with each payment. Why pay a fixed amount for reducing coverage? With an individual life insurance policy, the face value stays the same for as long as the policy is in force. However, the cost of term insurance goes up when you renew it, but it does depend on the term that you require. T10 - Premiums remain level for 10 years. On renewal they will increase for the next 10 year period. T20 - Premiums remain level for 20 years. On renewal they will increase for the next 20 year period and so on.

Expiry: The mortgage insurance you buy through a bank terminates when the mortgage is paid off. And you may be cut off when you reach a certain age, generally 70 years old. An individual policy can be held for as long as you want. If you have a term life policy to cover your mortgage, you can convert it into a whole life or permanent policy to cover taxes on your estate after you die.

Beneficiaries: With an individual policy, you name your own beneficiaries. Your loved ones can decide what to do with the life insurance proceeds, either paying off the mortgage or using the money for something else. With group creditor insurance, the bank is the beneficiary and collects the proceeds when you die.
"The banks offer convenience, but individual insurance offers portability and flexibility. That's a better deal, never mind the price. Don't leave it to chance. Make sure you have your Mortgage and lines of credit protected. The lenders are not in the real estate industry. They just want to get their money back. If that means selling your house at a discount price, they will.


Bank's Mortgage Insurance


Term Life Mortgage 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 a personal policy.


Over 10 companies competing for your business - get the best rates available based on your health situation.


The Bank is the Beneficiary


YOU choose the beneficiaries who get the money.


Policy is owned by bank


Policy is owned by YOU


Policy may be cancelled by the bank


Policy can only be cancelled by YOU


NON transferable


Fully transferable


NOT convertible


Fully convertible (life portion)


Premiums NOT guaranteed


Premiums fully guaranteed


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


Portable - your insurance can move with you


NOT guaranteed renewable at mortgage renewal date


Automatically renewable to age 75