Are you paying too much for your mortgage insurance?
by Terry Fay

You may have taken out the insurance that your bank or credit union offered you when you applied for a mortgage. If you did, that was good thinking. What you owe on your home is probably the single biggest debt you'll ever incur, so it makes sense to have it fully insured.

But, like many other people, you may not have known that you can obtain better coverage at lower rates by buying your own individual insurance policy!

Better Mortgage Insurance Coverage at Lower Rates

Generally speaking, the insurance offered by the bank is a "one size fits all" product. Individual insurance, on the other hand, is based on your own medical condition. If you're in good heath, why would you want to pay the same rate as someone who smokes a pack a day?

What if you change banks when your mortgage renews, you may lose your bank insurance coverage and have to reapply at your new lender. With an individual policy, you're free to shop the market for the best rate at renewal – you can take your insurance coverage with you without ever having to submit new medical information.

Your financial institution is named as beneficiary on insurance. You pay the premiums, but they'll get the money should something happen to you. An individual policy, however, allows you to name your own beneficiary – meaning your loved ones can decide when (or if) they want to pay off the mortgage or if they'd rather invest the proceeds instead.

What Would You Rather Have a Level or Decreasing Benefit?

One more difference between owning your own policy versus the financial institutions insurance coverage is that your policy value stays constant whereas the financial institutions decreases with the lower balance on your mortgage. When you first took out your mortgage the value of the insurance may have been $100,000 but now after 10 years the balance is only $50,000. It’s the $50,000 that gets paid off. If you had your own coverage your beneficiary would receive the full $100,000.

If you're interested in getting a comparison quote or learning how you can benefit from an individual mortgage insurance policy please feel free to call me.

The particulars contained herein were obtained from sources which we believe reliable but are not guaranteed by us and may be incomplete. The opinions expressed have not been approved by and are not those of DundeeWealth Inc., its subsidiaries, or its affiliates, including, but not limited to Dundee Securities Corporation, Dundee Private Investors Inc. / Ltd., Dundee Insurance Agency Ltd., Dundee Bank of Canada and Dundee Mortgage Services. This website is not deemed to be used as a solicitation in a jurisdiction where this Dundee representative is not registered.

Insurance products provided through Dundee Insurance Agency Ltd.
Only securities related products and services referenced are offered through Dundee Securities Corporation.

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