5 advantages to insuring your mortgage with an insurance company

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By Peter Doyle, Regional Director of Sales for SSQ Financial Services Firm

Did you know that you can get mortgage insurance from an insurance company? Well, you can, and here are some of the advantages of opting for an insurance company instead of your bank.

1. Choosing your beneficiaries

When you insure your mortgage with a financial institution, the financial institution is the policyowner.

This means that the bank is the designated beneficiary and would inherit the policy proceeds to pay off the balance on your mortgage should you die.

With an insurer, you don’t have to compromise. You are the policyowner and you get to select the beneficiaries and the insurance amount, which your beneficiaries will receive in the event of your death.

2. Deciding on the insurance amount

The loan insurance amount under a contract with a financial institution decreases with the mortgage balance.

An insurance company gives you more flexibility. The insurance amount doesn’t have to change, even if the mortgage is paid down.

Moreover, you can choose an amount that will cover all your debts (line of credit, car loan, credit cards, personal loans, etc.) and not just the mortgage balance.

3. Avoiding nasty surprises

The premiums on mortgage insurance from a financial institution may vary over the course of the loan. They may increase, for example, due to the claims experience.

Moreover, the premium amount will increase with each mortgage renewal. Why? Because as you get older, the risk to insure you increases.

Avoid fluctuating premiums by getting loan insurance from an insurance company. The premium is level and guaranteed for the entire term of the contract regardless of the renewal rate, your age, or your health, which can deteriorate over time.

Fixed premiums make it easier to plan monthly payments with no nasty surprises for your budget.

4. Staying in the same place

If you were to change financial institution, the insurance on your mortgage would end.

This means you must reapply for insurance and fulfill requirements for your health and answer selection criteria.

Certainly a lot of paperwork and hassle you can avoid! With loan insurance from an insurer, the contract remains in force even if you wish to change lender, to find a better interest rate for instance.

5. Converting your insurance

The mortgage insurance you take out with a financial institution ends when you have fully reimbursed your loan.

But what do you do if you still need insurance to protect your loved ones? An insurance company enables you to convert your loan insurance into permanent life insurance.

Getting a clear picture

It’s really worthwhile to compare the mortgage insurance offered by your financial institution and that offered by an insurer, while considering the added benefits of life insurance subsequently offered by the insurer.

Talk to your financial security advisor. He or she will analyze your needs and recommend a product that is suitable for you.