# Broker pushing insurance



## joelones (Oct 9, 2011)

Hi guys,

We have accpeted an offer on a property and as you can imagine it's been both stressful and exciting --- manily stressful if ask me. I'm trying to shop for rates but the bigs are so uncompetitive, yeah, I know, welcome to Canada...

The one BMO broker we're dealing with is offering 2.10 on 5 year variable and I'm trying to get addtional credit in the realm of 500-1500 to help offset notary/laywer fess whatnot. However, he's trying to push disability insurance ~ 30$ / month. Point being, kinda resent the pushing of additional products like this. Is this standard practice? Suggestions on what to do?

Thanks.


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## Davis (Nov 11, 2014)

Yes, it is standard practice to try to sell insurance with mortgages because mortgagors make a lot of money on that product. Which means it isn't good for you. Be firm, and if you decide you want disability or other insurance, be sure to shop around to make sure you are getting a good deal. BMO may or may not offer the best product - but you won't know if you don't get other offers.


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## joelones (Oct 9, 2011)

I guess I'm also getting confused between disability and/or mortgage insurance? Disability is typically already offered my our employers, is mortgage insurance worth it?


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## Xoron (Jun 22, 2010)

If it's standard mortgage insurance, then you're buying a fixed cost ($30/month) for a declining benefit (as you pay off your mortgage, you have less they have to cover if you file a claim)

Basic term life insurance is almost always a better deal.

If it's disability insurance, then they're just trying to sell you more products. Decouple this from your mortgage and look at what it would cost for an independent policy (or get a copy of what they're offering and shop it around).


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## amitdi (May 31, 2012)

I am in the same boat as you, maybe a tad ahead as i have made the decision regarding my mortgage. I declined insurance, planning to get it from my emplyer's group life and disability. My mortgage with MCAP, 5yr variable at 2% 20/20 prepayments.

For insurance, please check if its underwritten or not. I just learnt this concept, so pardon me if I am stating the obvious. This is what my broker had to say about mortgage insurance that came with his package:
They do retroactive underwriting, meaning they underwriter you when you make a claim. Proper life insurance is suppose to underwrite you ahead of time (meaning all the health check-ups now, not when you make a claim). I recommend you pass on it. The danger is that you pay the premiums and then will you go to make a claim, they reject your file (and claim).

Feel free to PM me if you have anything, although I am not an expert.


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## yyz (Aug 11, 2013)

You also need to look at your personal situation. Have a spouse?Do they work,have kids,etc.
I think life insurance may be a better bet as well.


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## carverman (Nov 8, 2010)

amitdi said:


> They do retroactive underwriting, meaning they underwriter you when you make a claim. Proper life insurance is suppose to underwrite you ahead of time (meaning all the health check-ups now, not when you make a claim). I recommend you pass on it. The danger is that you pay the premiums and then will you go to make a claim, they reject your file (and claim).


Marketplace did a tv show on this "apparent scam"..they underwrite and investigate when a claim is presented, Otherwise the banks continue to collect the premiums and hope that you never have to collect..more money for them and the financial institution gets a kickback for selling these extras on the mortgage.

if something serious happens like a heart attack that is not survivable...they deny the life insurance payout to the beneficiary stating that after checking the
full medical history of the insurer, they found a pre-condition relating to heart medication or blood pressure and therefore you are disqualified.
All they do is refund the premiums you paid and walk away leaving the survivor with a big mortgage and other expenses.



> *Banks make big profits on insurance attached to credit products*. Their persistent sales efforts make some borrowers think they can’t get loans without taking the bank’s insurance.


http://www.thestar.com/business/per...ortgage_life_insurance_has_flaws_roseman.html

A scam but apparently one they can get away with.


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## amitdi (May 31, 2012)

Thanks caverman. I didnt know the big banks also do it. I anyways dont like the big banks anymore than others, I dont know why people always want to stick with the brands.

I will stick with my organization's group life insurance. Or shop for one with proper underwriting.


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## uptoolate (Oct 9, 2011)

It's not like buying a car... where you get a discount on the mats when you buy (ok it's true the mats are way overpriced). If you need insurance, whether life or disability, it will always be better to get it from another provider. Both in terms of cost and control.


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## birdman (Feb 12, 2013)

When I was in the business our commission was a whopping 40% of the premium on a sickness and accident policy on a personal loan. If the customers premium was 1500. (which was normally just added to the loan) and we would get to keep 600.00. Then, figure out the day to day cost of the program (excluding claims) by the insurer and the profit they require then figure out how much gets paid out in claims? Not much? Like all insurance you are better to self insure if you can but of course most people cannot afford to or do not wish to take the risk.


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## Just a Guy (Mar 27, 2012)

When I was injured, I met a guy in rehab who had disability coverage on his mortgage. The bank's stopped requiring him to make payments until the mortgage came due for renewal, but they'd rolled the costs into his mortgage then refused to renew the mortgage, so he was stuck still owing all the money and needed to find a new lender while he was unable to work and had no income...

He had peace of mind until he found out the truth...then faced losing everything.


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