Mortgage life insurance premiums is usually a cost that most home buyers do not consider until after they've closed their mortgage.  Depending on the buyer's age and health, the cost of mortgage life insurance can easily add up to 10% of your monthly payments.  It is important to consider this cost when purchasing a home.

Ask 10 people their opinion on insurance, or more specifically, mortgage insurance, and you will undoubtedly get 10 different answers.  Insurance is a misunderstood commodity, which is surprising given its prevalence in society and even more so considering how important it is. With this in mind, we need to educate ourselves and come to an informed position on mortgage insurance.  The following should provide you with just that.

Mortgage life insurance protects you and your family in the case that the unthinkable happens and enables your loved ones to maintain a comparable lifestyle afterwards.  Mortgage life insurance can cover you, your partner, a guarantor and anyone party to the debt such that if something happens the mortgage is paid off.

The perfect fit with mortgage life insurance, critical illness and disability coverage are creditor protection insurance products.  Critical illness pays off your mortgage if one is diagnosed with one of ten specified illnesses, thus providing you and your loved ones with a living benefit and helping to maintain your family’s lifestyle.  Disability insurance provides benefits up to $2,000 for a period of up to 24 months, per type of disability, if an injury or accident has occurred that prevents one of the applicants from working.

1.     Mortgage life insurance is known as “decreasing term” insurance which means that the amount of coverage declines over time (the amortization period of the loan obligation) along with the debt obligation … however premiums remain constant.

2.     With “level term” insurance your coverage remains at the same amount for the term of the insurance, however, your rates will increase every term as you get older.

3.     Mortgage life insurance is designed to meet a single need at a low price – the overall cost is lower than level term over the duration of the mortgage.

Mortgage insurance is designed specifically to provide you with the peace of mind and financial security you and your loved ones need at the most economical cost for your largest debt.

Anyone with a mortgage should have mortgage insurance.  Even if you have no dependants or a spouse today, if you plan to extend your family, you should still get coverage and take advantage of the lower rates available at your current age and health status.  You may be insurable today, but that could change down the road when your family situation changes.

Should you obtain mortgage life insurance from your bank or lender?

Mortgage life insurance offered by most banks and financial institutions are, unfortunately, overpriced.  This is partly due to the fact that premiums are the same for both smokers and non-smokers.  If you are a non-smoker, premiums are significantly lower from independent mortgage life insurance sources.

Secondly, bank/lender mortgage life insurance products are not portable.  If you were to transfer your mortgage after the term, you will not be able to take your mortgage life insurance with you.  You may have to qualify again with a new lender.  Worse yet, if your health has changed, you may not be able to transfer your mortgage for fear of losing your mortgage life insurance.

With your interest in mind, BC Mortgage / Invis has researched and developed a competitive mortgage insurance program.  See below how our rates compare against the major banks.

Our Rates

TD Bank : www.tdcanadatrust.com/mortgages/mort_ins.jsp

Royal Bank: http://www.rbcroyalbank.com/products/mortgages/home_protector_insurance.html 

Bank of Montreal : http://www4.bmo.com/personal/0,4344,35649_36970,00.html 

Scotia Bank: http://www.scotiabank.com/cda/content/0,1608,CID5165_LIDen,00.html 

CIBC: premiums are not listed on their website 

You may also be interested in reading the Nov 1, 2003 Globe and Mail article on Mortgage Insurance entitled Mortgage Insurance is Robbery: Critics

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