# Mortgage Life Insurance



## wizin (Nov 3, 2014)

40yo Single Non-Smoker, Avg health - Only have folks with me
Took a mortgage of 290K on 25 year term

I am looking to get Life Insurance for Mortgage - I understand the banks option is different and only protects the balance of the mortgage owed and is generally expensive

I just wanted to ask how much should I be looking at, whats the best company etc, ( friend told me about Transamerica ) - I am not calling a broker yet and as they all want to sell a lot so wanted to be prepared

All adv welcome


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## dougboswell (Oct 25, 2010)

wizin said:


> 40yo Single Non-Smoker, Avg health - Only have folks with me
> Took a mortgage of 290K on 25 year term
> 
> I am looking to get Life Insurance for Mortgage - I understand the banks option is different and only protects the balance of the mortgage owed and is generally expensive
> ...



Most of the mortgage protection plans from banks and other lenders are only good as long as the mortgage lives. If you refinance you have to take out another policy. You are better, in my opinion, to look at term life insurance. It will be cheaper and still there even if you remortgage.


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## Mortgage u/w (Feb 6, 2014)

no choice to seek an insurance broker. Manulife, Transamerica, Canadalife all offer good products but you need a broker to access them. To many products and options to list....all depend on your personal situation and how much insurance you need. There is not much advice you can get here.....insurance needs are specific to you and vary greatly.


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## My Own Advisor (Sep 24, 2012)

Are you looking for mortgage life insurance or simply life insurance, potentially term.

The former is not a good product, the latter is much better.
http://www.myownadvisor.ca/mortgage-insurance-doesnt-work-everyone/

I would recommend a mortgage broker, there is a free quote on my site. 

I made the mistake many years ago of getting mortgage life insurance, never again


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## banjopete (Feb 4, 2014)

It's also important to keep in mind that the mortgage insurance you get from the bank pays the bank for the money you still owe on the property. Kind of a raw deal for a dead person to put it bluntly. Life insurance (plus any amounts provided for in your workplace benefits) pay your named beneficiaries, then they can pay the bank the money if that's what they want, and do what they want with what's left.

The options are plenty as Mortgage u/w mentioned and it's best to talk to a few people first and see what they think. 

For my personal scenario my thoughts were that over the time where I would have a mortgage, if something were to happen to me, I'd want my wife to be able to cover the balance of our mortgage plus some and vice versa for her. Good things to think about for sure, and it's nice to get the bank's fingers out of your pocket too.


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## fraser (May 15, 2010)

We looked at mortgage insurance from our bank many years ago. It was expensive. We got more insurance and better terms by buying term insurance on the market. 

We have found that whenever things like insurance (mortage, travel, life, etc) are offered by the bank and are very convenient to sign up for, the rates are higher than we could get by shopping around for an equivalent or better offering. At least from CIBC and Royal.


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## uptoolate (Oct 9, 2011)

Mortgage insurance is a scam. You're single, you're dead... why do you need to protect the bank? They're big boys and girls. As mentioned, if you have dependents or someone has co-signed the mortgage (it's not clear if your parents fit into either of these categories) then insurance might be in order. If so, then term life insurance is a much, much better deal. You can get far more protection for the same amount of dollars and the payout doesn't diminish as you pay down the mortgage. Also, you decide who the beneficiary is and then they can decide what to do with the money rather than the bank just snapping it up. Another money maker for the bank foisted on the unsuspecting. Banks are not our friends. Banks are big business.


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## carverman (Nov 8, 2010)

The other hidden "gotya" is that like travel insurance, they can check up on your medical history after your death and if they find you had
a pre-condition that directly contributed to your death...they can deny paying the mortgage life insurance policy.

*Marketplace episode 2008*



> *Mortgage insurance: Not always a sure thing*
> 
> If you have a mortgage on your home, chances are good you also have mortgage insurance. The idea is that if you should become seriously ill or die before paying off the mortgage, the coverage will kick in and pay it off for you. *It’s meant to offer peace of mind and to reassure you that your family will be able to stay in your home if anything should happen to you. *
> 
> ...


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## Beaver101 (Nov 14, 2011)

^


> ... It turns out a routine test at the doctor could be reason to deny your claim, if you don't mention it.
> * Had a cuff inflated on your bicep? That counts as being tested for high blood pressure. ... *


 .... :lemo:


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## uptoolate (Oct 9, 2011)

carverman said:


> The other hidden "gotya" is that like travel insurance, they can check up on your medical history after your death and if they find you had
> a pre-condition that directly contributed to your death...they can deny paying the mortgage life insurance policy.
> 
> *Marketplace episode 2008*


This is just disgusting. Similar to the 60 minutes episodes in the US in which people lose their health insurance when the wind up with some 'expensive' disease.


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## carverman (Nov 8, 2010)

uptoolate said:


> This is just disgusting. Similar to the 60 minutes episodes in the US in which people lose their health insurance when the wind up with some 'expensive' disease.


These policies are there to protect the bank.

I had one of these mortgage life insurance plans through CIBC. I didn't understand it at the time and though it was a good idea, even though at the time I was divorced. I thought then that if something happened to me, at least the life insurance would pay off the mortgage and the property would become part of my estate. 

After I found out that these optional policies sold by the banks are on some kind of "commission" with the life insurance underwriters, and the actual policy is written up "after the fact'...(your death).

The applications are set up by bank personnel (mortgage employees) and it can be very misleading to the uninitiated. 

There is no medical associated with these mortgage insurance policy applications, unlike some life insurance policies. 
The bank employee simply asks you "Are you in good health?"...yes?...check this box. 

The forms you sign with the bank stipulates how much per thousand you will be paying for the life of the mortgage. 

Mortgage=$100,000...the contract you sign with the bank will stipulate the monthly premium added onto your mortgage payment that goes directly to the insurance company. 

Lets say the monthly premium is 10c per $1000. That's $10 added every month to your mortgage payment.
If you remain in good health for the 25 years duration of the mortgage. you pay $120 a year for 25 years and end up paying $3000 in total. By then you are in the "60ish years" and if you need to buy a new life insurance policy at that age, the monthly premiums will be much higher. 

Much better to buy a term life when the premiums are lower based on your age. 

But even if you die suddenly, and they can't find any pre-conditions (heart issues), they pay off ONLY the remaining portion of the mortgage, so if you are close to paying it off completely, and "something" happens to you, there isn't any benefit that they will add to your estate (funeral costs) other than paying off the mortgage. 

After your death, if they find any preconditions that you may have had.... but checked off the box that basically said, "you testified on this application that you are in perfect health with no apparent health conditions"...they can say "you failed to disclose" and make the policy null and void....
.. and I believe return your premiums, but I'm not sure about that.

You are much better off to go to a professional certified insurance broker, have the life insurance policy explained in detail and perhaps a doctors report filed with it to be sure that they can't weasel out of the policy.


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## Toronto.gal (Jan 8, 2010)

carverman said:


> Lets say the monthly premium is *10c per $1000. *That's $10 added every month to your mortgage payment. If you remain in good health for the 25 years duration of the mortgage. you pay $120 a year for 25 years and end up paying $3000 in total.


You make good use of your DOL calculator.  

That monthly $0.10 per $1,000 premium, would most likely apply to the under 30 group, ie, the cheapest. The OP, at 40, would be quoted double that, and if purchased at 41, the cost would be significantly higher by about 40% [due to age bands, ie, 36-40/41-45]. But as noted already, the OP does not seem to need it.

There have been lots of articles about this topic, here's another:

*'There is no discount for non-smokers or women.'* 
http://www.thestar.com/business/per.../why_you_shouldnt_buy_mortgage_insurance.html


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## axelis (Jan 13, 2015)

I would second other posters' opinions re. term life insurance making more sense. At least that's what we did. Next question becomes: how much coverage do you need?


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## Just a Guy (Mar 27, 2012)

Depends on what you can afford/need if one/both people die.

On a rental, I don't have any insurance as the rent covers the payment even if I die. On my house, I don't have any because my net worth is significant. Others may not have the same mileage. A good minimum is the mortgage amount...that way they don't need to worry about paying the house. Of course it costs 10-15k to burry someone, and you'll probably want to take some time off, plus you'll lose that income...


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## nobleea (Oct 11, 2013)

Just get a decent life insurance policy to cover all your liabilities (and the expenses of raising kids if you have them). Mortgage insurance should not be its own policy.

Most people are either way over insured or way under insured.


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