When purchasing mortgage insurance should you purchase it...
Through the lending institution arranging the mortgage or should you purchase a separate policy through an insurance company?
Insurance Guy can place you with a company that covers a specific amount of money instead of only paying out the balance on the mortgage.
Bank vs Insurance Company, things to Consider...
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BANK TRUST CO., CREDIT UNION
• Policy is a group policy. Client has no control • Policy owned by lending institution • Coverage equals outstanding mortgage amount • Policy can be cancelled by bank, trust co., credit union and their group underwriter • Benefit payable only to lending institution • Policy nontransferable to other institution • Policy non convertible to other insurance • No additional values/benefits • Premiums not guaranteed |
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LIFE INSURANCE COMPANY COVERAGE
• Client enjoys complete control • Policy owned by Client • Coverage need not decline in dollar amount • Policy can only be cancelled by Client • Benefit payable to Beneficiary • Policy fully transferable/flexible • Policy fully convertible • Various options available to Client • Premiums fully guaranteed • No P.S.T. payable on Premiums |
The Individual Life Insurance Plan gives...
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The ownership of the insurance coverage to the Client. It is the Client who is in control and it is the Client who designates beneficiaries and allows the beneficiaries to use the proceeds in the most practical way at the time of need. The cost is fully guaranteed and the rates are very competitive. In fact, the ‘bank’ plan level mortgage insurance rates actually translate into higher costs since the amount of insurance coverage decreases as the amount owing on the mortgage decreases through mortgage payments.
Statistics indicate an average Canadian family will move about once every five years. While a ‘bank’ plan terminates upon sale of the house- making necessary application and approval for new coverage on any new mortgage – an Individual Life Ins. Plan is fully transferable. Likewise, if the Client chooses to refinance his/her mortgage with a different lending institution, the existing ‘bank’ mortgage insurance terminates, again necessitating application and approval of new mortgage insurance. Moreover, the Client should be cautioned. No guarantee exists that she/he will qualify for new insurance coverage 5, 10, or more years in the future. |
As well, an Individual Life Ins. Plan can be converted into another type of plan to support future financial and estate planning strategies. For example, appropriate investment options can be provided to facilitate the funding of an accelerated mortgage paydown program; and, once the coverage is no longer needed for mortgage insurance, it can be used for such areas as pension maximization, estate equalization or capital gains funding. You make the choice.