Mortgage Life Insurance in it’s basic form is actually ‘creditor protection’ insurance provided to consumers by the banks or lending institution. Coverage is for the exact amount of the outstanding loan at any time, and the beneficiary is the bank or lending institution.
Because creditor protection insurance is also a form of group insurance, the policy contract is owned by the bank and not the consumer. The coverage is guaranteed only for one year at a time, and there’s no guarantees that the coverage will even be available next year, or if it is, what the premiums will be at that time.
A far better alternative to traditional mortgage life insurance is renewable and convertible term life insurance.
Term life insurance is a life insurance policy that is generally purchased through an independent life insurance broker. Term life insurance policies not only provide better life insurance coverage, they do so at a cheaper price that mortgage life insurance. Term life insurance policies are generally shopped for premium by life insurance brokers, making it a competitive product. No such shopping exists for mortgage life insurance, banks simply present the premiums without any sort of comparision.
Term life insurance policies have the following benefits:
All in all, mortgage life insurance is considered a substandard life insurance policy and consumers should always investigate a term life insurance policy as a far better option.
Canadians seeking mortgage life insurance can get an instant term life insurance quote right here on lifecover.ca – see the top of this page.