At National Truck League we offer a full range of insurance solutions for the trucking industry. One of these solutions is life insurance. Our staffs of licensed insurance professionals meet with Owner/Operators, drivers, employees and company owner’s regularly regarding life insurance. One topic that often surfaces during these meetings is that of mortgage insurance. Many Canadians have been through the process of purchasing a home and signing for a mortgage when being asked by the bank “Do you want to protect your home and your family should you pass away?” For most the answer is simple – of course you do. BUT WAIT! Don’t sign. If you really want to protect your home and your family then life insurance is your best option; not mortgage insurance. Here is why.
The first and most important thing you need to know about mortgage insurance is that there is a possibility when you need to make a claim you will be denied and your premiums will be refunded. This is because mortgage insurance is not underwritten at the time of purchase but at the time of claim. In other words you may not be qualified for the coverage you are buying at time of purchase. But, wait you say, I purchased the mortgage insurance and it was sold to me by the bank. Yes it was sold to you by the bank, but mortgage insurance is an external financial product and banks are quick to wash their hands of the deal and point you to the fine print. Just Google “Mortgage Insurance Horror Stories” and you will find the heartbreaking tales of those who experienced death in their family only to have their mortgage insurance claim denied.
Another significant difference between mortgage insurance and life insurance is who receives the death benefit. In the case of mortgage insurance it is the financial institution who receives the benefit. With life insurance the benefit goes directly to your beneficiary. You are now giving control to your beneficiary not the bank. They can choose to pay down the mortgage or other debt and then some.
With mortgage insurance your benefits decrease but your payments do not. Every time you make a mortgage payment your coverage will be decreasing but your payments will stay the same. For example, you purchase mortgage insurance for a $300,000 benefit. As you pay the premium monthly, the payment remains the same but the benefit amount is decreasing with each mortgage payment. Now let’s say you pass away when there is only $50,000 left on your mortgage. With life insurance your beneficiary would receive the whole $300,000 benefit and use $50,000 to pay off the mortgage. With mortgage insurance the only benefit paid out is a $50,000 benefit to the bank to cover your mortgage. So what happened to the other $250,000 in coverage you had? 
In summary here is why you want to avoid mortgage insurance:
With mortgage insurance there is post-claim underwriting
With mortgage insurance the bank/financial institution is the beneficiary
With mortgage insurance the benefit is declining as you make payments
Remember mortgage insurance is sold by bank employees who are not licensed insurance professionals. These bank employees are often not trained to explain the legal intricacies of the insurance products they are selling. You could very well pay premiums and think you are covered, only to realize later you are not. Life insurance is much better coverage and often less expensive then mortgage insurance. You lose control, value, and flexibility when you sign for mortgage insurance with your mortgage lender. Call National Truck League today and let one of our licensed insurance professionals walk you through the process of protecting your family and your home with life insurance. There are many options, terms and payment plans available to fit your situation.
For further clarification CBC marketplace has a great video on mortgage insurance vs. life insurance. You can watch the video at http://www.youtube.com/watch?v=qe61HVGIwUo
About the Author
Rod Stiller is the President of National Truck League Insurance Solutions. NTL is a full service brokerage that is 100% dedicated to the trucking industry. National Truck League partners with the trucking industry to protect their trucks, their team and their profits. You can visit National Truck League’s website at www.nationaltruckleague.com
