Perils of a mortgage life policy

Perils of a Mortgage Life Policy

You should buy a house and a large loan to pay for it. Now the banks are asked if you want insurance.

Reluctant to leave owed when you die, you say yes. Within minutes, your application is approved and the cost will be added to your mortgage payment.

For lenders, life insurance is an easy sell. They point out that during the time you are at risk and not do some comparison shopping.

And they make you sign a waiver form if you say no, agree not to hold lenders liable if something bad happens to you.

Most people do not realize that life insurance sold by mortgage lenders is different from the policies sold by insurance agents and brokers.

It seems a lot of time. Although mortgage insurance is more expensive than insurance sold separately.

Suppose you take out a mortgage of $ 250,000 at Royal Bank of Canada, you are 49 years and your spouse is 45.

If you choose an insurance plan, RBC HomeProtector. You pay a monthly premium of $ 153.90 - $ 1,846.80 or per year.

Before you register, you need to shop around. You can do it. www.getterm.cc, sites that offer term life insurance coverage for Canadians.

You put in your state, zip code, age, and smoking and the amount of coverage you want. Then you can compare premiums among the 30 to 50 companies.

$ 250,000 for life insurance for a period of 10 years, the awards range from $ 390 to $ 792.50 per year for a policy of $ 250,000 for a period of 20 years, the awards range from $ 710 to $ 2,150 per year.

In both cases (10 years and 20 years), almost all companies charge less than the blood of Home Protector.

Sites that are operated by compu Inc., a software life for life insurance.

Consumers can get names of three agents who were near to them that they can buy a policy.

"You buy life insurance to replace the economic value of dead people. The debt is tied to a "compu. Life of Bob Barney, president, said.

If you have a mortgage loan, you will have to pay if you die. However, mortgage payments are only one-third of your income. (Banks will not lend you more than that).

This means that your family still have to replace the other two-thirds of your income, you need enough insurance to cover all your financial obligations. Your dependents. (Including the cost of secondary education).

compu live income replacement calculator on the website so you can figure out how much money. Protection you need without the insurance agent.

There are other important differences between mortgage life insurance sales by banks and term life policies sold by Insurance agents and brokers are as follows:.

* Warranty: group insurance offered by the bank as a one-size-fits-all product. Smoking and non-smokers were included in the same age. Insurance will depend on the clinical condition of the customer "If you're a smoker, weighing more than a little, you may be better off with the bank," Andrew Rickard, a financial application to work as a consultant. Insurance said.

* Transfer: If you change your bank when the mortgage is up for renewal, you will need to reapply for coverage at a new lender. It means that new medical evidence, and pay rates vary depending on your current age. Suppose you have been diagnosed with diabetes, since you took your mortgage. Your new mortgage lender may not want to be with you.

* Premium class, you can pay $ 100 per month for the bank's mortgage insurance. However, the amount owed on your loan with each payment. Why pay a fixed amount of the coverage? The lives of each person who will remain in the same currency as long as the policy is in force. But the cost of the insurance period to go up when you renew.

* Expiration: mortgage insurance you buy through a bank terminates when the mortgage is paid off. And you can be cut off when you reach a certain age, usually 70 years, each policy can be stored for as long as you want if you have a life policy that will cover the period of your mortgage, you can convert it to be. Permanent whole life policy to cover the taxes on your land when you die.

Benefit: each get your own policy. Your loved ones to decide what to do with money or insurance to pay off the money for something else. Secured creditors and banks to collect money when you die.

"Bank of convenience. However, individual insurance portability and flexibility. It is not always a good deal compared to prices "Rickard said.

If you are dealing with a mortgage broker, you can buy other types of insurance.

Mortgage Protection Plan provides more than 100,000 people for more than 40,000 for life insurance and disability insurance. Policies that are insured by Manulife Financial.

"Our life insurance is portable, which is different from that offered by banks," Tina Bellavia, vice president and product manager for a mortgage protection plan said.

The plan has a level of premium to be slightly more expensive than term life. However, it is 33 percent cheaper per dollar of coverage over the loan period of 25 years, the company said.