10 Things you should know about Mortgage Insurance
Canadian Mortgage Insurance
Reason #1 Generally, mortgage life insurance from most lending institutions is non-convertible term insurance – there is no cash value.
Reason #2 No premium flexibility.
Reason #3 No ability to move to a permanent life insurance policy if your needs change.
Reason #4 Usually mortgage life insurance covers the exact amount of your mortgage. And your coverage decreases as the mortgage is paid down.
Reason #5 You have no coverage when the mortgage is paid off.
Reason #6 Your lender owns the policy and if you find a better mortgage rate at another lending institution, you will have to re-qualify medically for the life insurance protection.
Reason #7 Your lender automatically pays off the mortgage if you die. Your beneficiary has no choice about how to use the funds, at a time when funds may be required the most.
Reason #8 The cost per $1,000 of coverage generally increases every year. When you think about it, costs may increase while coverage decreases.
Reason #9 Generally most mortgage life insurance is underwritten at time of claim.
Reason #10 Your mortgage life insurance cannot be moved to another institution.