Mortgage or creditor insurance vs personal insurance
One of the largest purchases in anyone's life is the purchase of a home. You scrimp and save to buy the home of your dreams. Now you want to protect it. But what is the best solution? The life insurance the bank is offering you who has your mortgage OR should you purchase life insurance with a financial advisor, called personal insurance?
The answer is the latter. Reasons can be quite obvious.
Let's use $250000 as coverage for an example.
Creditor coverage is declining as you pay down your mortgage. Pay down $50000 on the mortgage your coverage is at $200000.
Personal insurance stays at $250000 as you pay down your mortgage.
Creditor coverage must be renewed each time you renew your mortgage. Personal insurance could stay untouched even if you renew your mortgage.
Creditor coverage pays off the lending institution if you die. Personal insurance pays out your beneficiaries if you die.
Creditor coverage asks questions on your claim when your spouse comes into the bank to let them know you've passed away. You only answered a few short questions upon application at the bank. If you have any pre-existing condition that wasn't disclosed when you purchased the coverage, they can deny your spouse's claim. Personal insurance asks questions before you pay your first premium. All pre-existing conditions are disclosed through that initial health questionnaire and premiums are only taken from you if you are considered a good risk to the insurance company (healthy). If you die, your claim could be paid to your beneficiaries within a few weeks.
If you have a mortgage now, what are you paying in premiums for your creditor insurance at the bank? It would be worthwhile for me to do a comparison for you.
For further info on creditor insurance vs personal insurance, an article appeared in the thestar.com back in 2010.
Call me for your consultation on your insurance with your lending institution vs buying a personal insurance policy. As always, I'll ask the question "Are You Covered?"