![]() Why pay a fixed amount for reducing coverage? With an individual life insurance policy, the face value stays the same for as long as the policy is in force. Level premiums: You may pay $100 a month for the bank's mortgage insurance, but the amount owing on your loan goes down with each payment. Your new mortgage lender may not want to insure you. Suppose you have been diagnosed with diabetes since you took out your mortgage. This means submitting new medical evidence and paying rates based on your current age. ![]() Portability: If you change banks when your mortgage is up for renewal, you will have to reapply for coverage at the new lender. "If you're a slightly overweight smoker, you may be better off with the bank," says Andrew Rickard, a financial writer who used to work as an insurance adviser. Individual insurance is based on the client's own medical condition. Smokers and non-smokers are lumped together in the same age category. Underwriting: The group insurance offered by banks is a one-size-fits-all product. There are other key differences between mortgage life insurance sold by banks and term life policies sold by insurance agents and brokers: You need enough life insurance to cover all your financial obligations to your dependents (including post-secondary education costs).Ĭompulife has an income replacement calculator at its website, so you can figure out how much coverage you need without relying on a life insurance agent. This means your family still has to replace the other two-thirds of your income. But the mortgage payments are typically only one-third of your income. If you have an insured mortgage, your loan will be paid off if you die. ![]() It's related to income, not debt," says Compulife president Bob Barney. "You buy life insurance to replace the financial value of the person who died. The website is run by Compulife Software Inc., which also supplies quotes to life insurance brokers.Ĭonsumers can get the names of three agents near them where they can buy policies. In both cases (10-year and 20-year terms), nearly all of the companies charge less than RBC's Home Protector. For a $250,000 policy with an initial term of 20 years, premiums range from $710 to $2,150 a year. Then, you can compare premiums among 30 to 50 life insurance companies.įor a $250,000 life insurance policy with an initial term of 10 years, the premiums range from $390 to $792.50 a year. You put in your postal code, age, health and smoking status and the amount of coverage you want. You can do it at a website that offers comprehensive term life insurance quotes for Canadians. If you opt for the RBC Insurance HomeProtector plan, you'll pay a monthly premium of $153.90 – or $1,846.80 a year.īefore you sign up, you should shop around. You're 49 years old and your spouse is 45. Suppose you're taking out a $250,000 mortgage at the Royal Bank of Canada. It sounds like a great deal at the time, but mortgage life insurance can be more expensive than insurance sold separately. Most people don't realize that the life insurance sold by mortgage lenders is different from the policies sold by life insurance agents and brokers. They suggest it at a time when you're vulnerable and have yet to do any comparison shopping.Īnd they make you sign a waiver form if you say no, agreeing not to hold the lender responsible if something bad happens to you. Within minutes, your application is approved and the cost is added to your mortgage payments.įor lenders, life insurance is an easy sell. Reluctant to leave an unpaid debt when you die, you say yes. Now, the bank is asking whether you want life insurance. You're buying a house and taking out a big loan to pay for it.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |