Mortgage Insurance

By: Mylife Canada  09-12-2011
Keywords: Life Insurance, Mortgage Insurance, insurance coverage

Key Facts

  1. Mortgage insurance policies from the bank only take care of the needs of the bank.
  2. A term insurance policy can ensure all costs are taken care of in the event you can’t.
  3. Term Life Insurance policies offer better value for your monthly payments.

myLIFE CANADA ~ Mr. Dempsey

Whether you're buying a home for the first time, or refinancing an existing mortgage, someone has probably suggested you purchase mortgage life insurance. But don't rush into buying a policy until you've looked at all the possibilities. You could end up saving money and getting added life insurance coverage at the same time by purchasing a term life insurance policy instead.

What is mortgage life insurance?

Mortgage life insurance, also known as mortgage insurance or creditor insurance, is offered by most banks and lending institutions. It is a life insurance policy that pays the balance of your mortgage to the lending institution if a person listed on the mortgage passes away.

How does term life insurance cover your mortgage?

When you purchase a term life insurance policy, you take into account all the money your family will need in case you are not around to help out. This includes your mortgage payments.

Extra coverage with term life insurance

A term life insurance policy gives you added coverage and flexibility over a mortgage life insurance policy. The beneficiary of a mortgage insurance policy is the bank, whereas your family receives any payout from your term life policy directly. This gives your family the flexibility of using the money to pay off debts, or, if they can still carry the mortgage payments, they can use it for investing and securing a future income.

Mortgage insurance policies only cover you for the amount of your mortgage you owe to the bank. As you pay down your mortgage, your coverage amount decreases with it. This is called a reducing balance. With a term life insurance policy, you have a constant level of coverage for the whole term and are getting better value for your monthly payments.

Shop, compare and save

When purchasing your new home, take the time to shop around for life insurance. Compare the cost of a term life insurance policy to a mortgage insurance policy. Chances are you'll find a term life insurance policy will have lower yearly premiums and offer more coverage and flexibility than a mortgage insurance policy.

Keywords: insurance coverage, Insurance Policies, Insurance Policy, Life Insurance, Life Insurance Policies, Life Insurance Policy, Mortgage Insurance, Mortgage Insurance Policies, Term Life Insurance,

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Critical Illness Insurance

Most Critical Illness Insurance plans include a full refund of premiums to the family should death occur before the maturity of the plan (usually age 75) without reporting a claim. A Critical Illness Insurance plan from myLIFE CANADA is insurance protection that guarantees the payment of a tax-free lump-sum benefit when a critical illness is diagnosed.


Universal Life Insurance

To address the need for insurance products more responsive to the changing economy, insurance companies began marketing a new generation of insurance products including the Universal Life policy. Any amount of the premium that is over and above the cost of insurance and any fees are designated to your policy's cash value account. Universal Life Insurance from myLIFE CANADA offers flexibilty and lifetime coverage to meet your varied life needs.


Whole Life Insurance

Charitable giving -- leaving the proceeds of the policy to charity to provide a large tax deduction for the final tax return. Whole Life Insurance has a level cost of insurance where the premiums stay the same for the life of the policy. You can add Child or Spousal Riders -- additional insurance coverage for a child or spouse on the same policy.


Term Life Insurance

However, the policy does not provide any returns beyond the stated benefit, unlike permanent life insurance policies, which have a savings component that can be used for wealth accumulation. Once the policy is expired, it is up to the policy owner to decide whether to renew the Term Life Insurance policy or to let the coverage end.