Discussions

Had a good discussion around GoFundMe and the different insurance offerings that are out there to help protect your family. Why don't we talk about how to best protect your mortgage. With home prices high as ever, and mortgage interest rates at higher than expected rates saving anything on your monthly payment can be crucial. So lets talk about the firstly, the difference's between the two products, and what you can expect to achieve by making a switch. (Again, if you're healthy enough to do so)  
 
Most mortgage insurances are a Life and Disability Insurance bundle. You pay a flat rate for the life of your mortgage that takes care of 1) the balance outstanding of the mortgage in the event of your passing, or 2) provides your monthly mortgage payment for 2 years if you are considered disabled and unable to work.  
Things to consider here are, as you pay down your mortgage balance you are receiving less death benefit for the amount of premium you are paying (we call that level premium, declining benefit) and most people have some type of LTD through work, which in the event of a disability, likely would cover the cost of their mortgage. Also, you are paying in most cases your Mortgage Lender to pay themselves in the event of your passing. Think about that for a minute.  
 
Typically, you are not underwritten for lenders insurance at time of application, there may be a questionnaire with a couple of health related questions, but ultimately you're approved at time of purchase, and potentially underwritten at time of claim. This is good, because you may have insurance you otherwise can't get as an individual with poor health, however, it leaves the ultimate pay out decision in the hands of your lender (which can sometimes be bad).  
 
Personal Term Life Insurance on the other hand is a level premium, level benefit policy. Where the cost of the term doesn't change over the length of the term agreement, and the benefit amount payable isn't reduced or altered as long as the policy stays in force. So what I often suggest to client's is, what happens if you remortgage for a renovation, or you borrow some equity to invest in a revenue opportunity, wouldn't it be better to insure the full value of your home, for the life of the mortgage? Typically the answer is yes!  
 
Personal Life Insurance is underwritten at time of application, so as long as you aren't fraudulent in your application, and your healthy at time of writing, once you are approved you cannot be considered uninsurable beyond that point. They insured a healthy you, it doesn't matter if current you isn't healthy at time of passing. This way you know that the coverage you have, is the coverage you are paying for. With personal insurance you also get to name your beneficiary, and they get to decide what to do with the funds, often paying off your mortgage isn't the best use of that money because interest rates are still lower than what you can get investing your money properly. But they have freedom of choice, which is valuable.  
 
Anyway, happy to answer any questions... or discuss back and forth what your thoughts are. But it should be noted this also applies to credit protection, like RBC's Loan Protector Premiums.