Mortgage insurance is a great concept. Here’s why it should be through a licensed professional, instead of through your lending institution.
After approval for a mortgage, lending institutions will offer the homeowner’s mortgage insurance. It is life insurance on a homeowner that pays off the balance of the mortgage owing if the insured homeowner were to die. This is not the same as CMHC insurance though, which happens if you want to buy a home with a down payment of less than 20%. This is also known as mortgage default insurance.
We encourage you to have life insurance in place to pay off debt in the event of the homeowner’s death. This alleviates immense financial stress and hardship during the grieving process. You can rest easier knowing that you own the home outright. Homeowners are better off pursuing this insurance coverage privately, not their lending institution. It should be with an insurance specialist.
Why would you want private mortgage insurance?
- Affordability. The insurance premiums tend to be less if you buy insurance privately.
- Death Benefit. The policy death benefit will decrease each month as the mortgage balance gets reduced. But, the insurance premiums will remain the same. Privately-held life insurance gives the homeowners the option to keep the death benefit level.
- Flexibility. Goals and objectives may change over time and the homeowners may choose to use the insurance proceeds elsewhere.
- Ownership. The lending institution owns the insurance, not the homeowners. With that comes a loss of control over managing the policy and the beneficiaries. By pursuing insurance coverage privately, the homeowners remain in control.
- Portability. Insurance coverage stays in force, even if you switch lending institutions. Insurability can change in an instant. Having guaranteed insurance coverage regardless of what happens with your mortgage is instrumental.
- Security. Traditionally, insurance through the lending institution will underwrite at the time of claim. This opens the door for the coverage to be invalid if there were pre-existing conditions. If there are other issues not specified, that can also cause the denial of coverage. With a licensed insurance professional, the underwriting will happen at time of application. You’re able to remove the uncertainty from the equation.
We specialize in providing this type of insurance for homeowners. Contact us to get started and get a quote, free of charge!