July 17, 2018

Is Mortgage Protection Insurance A Good Idea?

Mortgage protection insurance is a form of life insurance that covers your mortgage debt if you die or become disabled.  It is a very popular sell by the banks because you can just add the premium to your mortgage payment.

So you ask, isn’t this a good thing?  Well most people in the industry would say no for the following reasons:

  1. As your mortgage decreases, so does your payout because it only covers the outstanding mortgage balance however your insurance premiums remain the same
  2. The monies go directly to the lending institution and not to you to decide how you want to disburse the monies.  Maybe paying off the mortgage is not the best decision
  3. In case of disability, the policy will generally cover your monthly mortgage payments until the debt is finished but nothing else
  4. There is no medical, unless you disclose a pre-existing condition and your claim could be denied if they find something that violates the insurance contract

A better option would be life insurance.  Your payout will remain the same through the term of your policy and you can allocate the funds as you wish.  Generally speaking, life insurance is less expensive than mortgage insurance.

Always keep in mind that the banking community is under huge pressure to cross sell services and they benefit quite nicely by selling mortgage insurance whether it is in your best interest or not!

Colleen Saunders is a 25 year veteran in the mortgage industry serving Oakville, Burlington, Mississauga and Toronto and offering all mortgage related services such as 1st & 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406