Mortgage Insurance Canada
Buying a home is a major investment, and usually this means purchasing mortgage insurance from either a bank or some other financial lending institution.
Most of the time the lending institution (often a bank) requires this
mortgage protection before they will approve the application.
What is often not made clear by banks is that term life insurance has
when compared to bank mortgage insurance!
With term life:
The beneficiary is whom you choose (e.g. spouse), instead of the lending
You own the policy, and not the lending institution
Many policies can be converted to permanent life insurance for investment and
tax purposes after the term is finished (dependent on the policy)
- Premiums are not taxable
- Instant, online term life quotes. Shop and compare! -
Here is an example scenario:
Mr. and Mrs. Smith have purchased
mortgage insurance protection from their bank when they bought a home. Unfortunately, a
few years later Mr. Smith passes away. The bank immediately forces Mrs. Smith
to pay off the entire mortgage with the proceeds of the policy, even though
Mrs. Smith has other pressing needs for those funds (there are several tuition
fees from her children to pay for, and renovations need to be done).
If they had purchased term
life insurance then Mrs. Smith would be the beneficiary, and would receive the
benefits. It would then be at her discretion whether or not to pay off the
entire mortgage, or pay part of it and use the other proceeds elsewhere.
It would be especially
advantageous not to pay off the entire mortgage if they had obtained it at a
good interest rate.