For most, purchasing a home is the most significant financial decision you ever make. With house prices on the rise, and interest rates at all-time lows, more and more Canadians continue to take on record amounts of debt. Buyers are often preoccupied with the new home purchase when being asked if they want to protect their family with Mortgage Insurance from the Bank or their lender. When looking at the coverage, pricing and processes used by Banks and lenders, it brings up some very important considerations that consumers should be aware of.
There are many misconceptions about what Mortgage Insurance really is. And while many people have learned to “say no” to the insurance offered by the Bank, very few actually understand why…and even fewer seek out the protection that they actually need.
Below is a summary of the key differences between the coverage provided by the Bank or lender vs an individual coverage that is available from SC Insurance.
What is Mortgage Insurance?
In simple terms, “mortgage insurance” refers to coverage which ensures that in the event of your death, the mortgage is covered, and your dependents and your estate are not left with the burden of this debt. Clearly, this is an important coverage that everyone needs to understand in order to make the right decision for themselves and their dependents.
The confusion lies in the 2 types of Mortgage Insurance that are commonly available – Mortgage Insurance directly from the Bank, and Individual Insurance from a Life Insurance company which is intended to cover this new debt. Any coverage that provides a benefit to cover the mortgage balance, or mortgage payments, can be considered Mortgage Insurance.
The below chart highlights the differences between these options. Whatever your unique needs or financial obligations, we can help you select the right solution to protect your mortgage, your family, and your life.
Did you know?
Every one of the big five banks blend their smoking & non-smoking rates, and some also blend the gender rate on mortgage, personal loans and Line-of-Credit insurance products. That means that a female non-smoker could be paying the same rate as a male smoker
|Bank Mortgage Insurance Cost||SC Insurance Term Policy Cost|
|52 Year Old Male – $500K Mortgage||$260/month||$84.51/month|
|35 Year old couple – $1M Mortgage||$240/month||$63.09/month|
* Premiums based on illustrations available, and not guaranteed
Key differences between Bank Mortgage Insurance and Personal Coverage from SC
|Bank Mortgage Insurance||SC Insurance Life Policy|
|Do you get to pick the beneficiary?|
|Is the policy convertible?|
|Can you keep the policy if you move?|
|Are you in control of the policy?|