Life insurance for your mortgage loan: discover its benefits
Many borrowers mistakenly believe that they have to purchase the mortgage insurance offered by their lender. This is absolutely wrong! You can get your mortgage life insurance policy from anywhere without your insurance company being affiliated to your bank. Find out why it’s in your best interest to get an individual life insurance policy to cover your mortgage.
You remain in control of the policy
Insurance contracts sold by banks only cover mortgage payments, even if your loan is almost fully repaid. The balance of the insured loan is also paid directly to your lender. In other words, you do not own your policy.
On the contrary, life insurance allows complete freedom so your beneficiaries can spend the insurance benefit as they see fit. They may decide to liquidate a line of credit, personal loan, or use it to pay for children’s education.
You choose your beneficiaries
As part of a proposed contract with your bank, only the lender is the beneficiary of the contract. If you apply for life insurance, it’s up to you to choose the beneficiaries.
You retain your contract even if you change your lender
Your bank just offered you a mortgage renewal but you after shopping around you found a much cheaper cheaper rate with another lender? What will happen to your mortgage insurance?
If you purchased your policy with your bank, you can not transfer it to your new loan: you have to sign a new contract, which could not to be to your advantage, because you have grown older since getting your first loan. In addition, if your health has deteriorated, premiums will increase considerably, and you may have difficulty finding new insurance.
However, if you have opted for an individual life insurance contract, it remains active in the same conditions as initially applied for: premiums do not change, despite the fact that you get older and may experience health problems.
The insurability is established when you apply
In the case of life insurance policies offered by brokers, customer insurability is usually established before signing the contract, which avoids surprises to beneficiaries in the event of a claim. Instead, insurance offered by lenders will study the insurability at the time of a claim. Only at that time do they fully analyze the risks and sometimes refuse to pay the product benefits, sometimes opting to simply refund premiums.
You save thousands of dollars
You simply need to compare price to realize how much savings can be had by taking out life insurance rather than the mortgage policy offered by your bank. Rates can range from simple to double, representing several thousand dollars in savings per year for a loan of several hundred thousand dollars.
You can upgrade your contract
In case of early loan repayment, insurance payments to your lender are forever lost. In contrast, with life insurance policies taken out with a broker, there is usually a conversion clause that can turn your temporary insurance policy into permanent insurance without further questionnaire or medical examination.
Getting individual life insurance seems more advantageous than mortgage insurance offered by your bank. And with the savings generated, you can supplement with disability insurance and critical illness insurance in order to be fully protected.