Buying a home is a big deal and most people look to protect their investment with insurance such as mortgage protection or critical illness. Often the lender who holds your mortgage will offer this to you at a price, and although convenient, there are much better options out there that give you better value, greater flexibility – and often a better price.
DON’T RENT YOUR INSURANCE – 5 REASONS WHY
1. You don’t OWN the policy.
This may seem obvious by the title, but with insurance through the lender, you don’t actually own your policy – the lender does. And not only are they the owner, but they are also the beneficiary. The lender receives the benefit from the policy strictly to pay off the mortgage, and nothing else. No money is given to your family no matter what their current needs are.
2. No flexible coverage.
The insurance policies offered through lenders have no flexibility, and you are insured only for the amount of your mortage. You can not alter, renew or convert the policy and if you chose to move your mortgage to another lender, you can not transfer it. Your coverage ends when the mortgage is paid off or ends.
3. No guaranteed coverage.
Nope. Your premiums and benefits are not guaranteed and the lender can change or cancel the policy at any time.
4. Price is non-negotiable.
When you purchase insurance through the lender, you are actually part of a group policy/plan. This makes the price non-negotiable. You pay the same rate as everyone in the group, regardless of your age, health or smoking status.
5. You never actually qualified.
So you answered all the questions, you’re paying the monthly premium, but chances are you never actually qualified for the insurance in the first place! But how can that be? Well, most lenders aren’t certified to sell this type of insurance and will find loopholes to disqualify you from receiving the beneft if you submit a claim. Essentially you are trying to qualify for insurance AFTER you need it, when you already thought you were protected.
WHAT’S THE ANSWER?
The solution is simple – do your homework and find other suitable options. They may not be the easier options but when it comes down to it, you want to make sure your family and their future is protected.
Options such as Family Term and Critical Illness insurance from Manulife make much more sense when you are looking to be fully protected.
- First, you own your policy and name your beneficiaries.
- Both types are much more flexible with options that allow you to chose the amount of coverage you want and need, regardless of your mortgage balance. You can increase or decrease your coverage, renew it and if you pay off your mortgage or sell your home, your coverage continues!
- If your circumstances change (as life tends to do), your beneficiaries receive the benefit and can best decide how to use the money – beyond just covering your mortgage.
- Your premiums are based on your age, health, and smoking status, and premiums and benefits are guaranteed for the life of the policy. Only you can cancel or make changes to your policy.
- And finally, and probably more importantly, you qualify for your insurance BEFORE it is sold to you so that when you have to submit a claim, there are no loopholes preventing your family from getting the coverage and benefits they need. Congratulations – you are now owning your insurance, not renting it!
If you are interested in getting more information on the options available to you, please feel free to contact us!
The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This newsletter was written, designed and produced by Brett Wackenhut for the benefit of Brett Wackenhut who is a Financial Advisors at Fusion Financial Management, a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Mutual Funds, approved exempt market products and/or exchange traded funds are offered through Investia Financial Services Inc.
