Mortgage insurance vs life insurance - which one provides the best protection?
When purchasing a home, your lender will invariably offer mortgage insurance. But, did you know that you have another option for ensuring your mortgage and debt are protected in the event of death or disability?
Prudent financial planning has never been more important than it is now. In our recent Integrated Planning video series, WealthCo’s Vice President of Insurance Advisory, Jeff Dyck, a proud member of the Integrated Advisory Network, takes us through the integrated approach to financial planning. We’ve included a synopsis below.
The Alternative to Mortgage Insurance
Rather than purchasing mortgage insurance, homeowners have the option to secure traditional term insurance - the difference between these two options is critical but is often overlooked by the vast majority of Canadians that have a mortgage on their home.
Why Term Insurance Delivers Better Value Than Mortgage Insurance
The bank will be quick to offer a seemingly simple and convenient option - mortgage insurance which can be obtained quickly without the need for medical underwriting or additional paperwork. However, there is a crucial distinction that is often overlooked: the bank's mortgage insurance primarily serves to protect the bank's interests, not the homeowner's interests, while the coverage amount gradually decreases over time as the mortgage balance shrinks.
Traditional term insurance provides constant coverage throughout the mortgage term. Premiums are typically lower in the brokerage market compared to bank offerings. Crucially, homeowners own the coverage, and beneficiaries receive payouts directly rather than the bank receiving them.
The Wiser Choice: Term Insurance
Understanding these differences enables informed decisions. Bank mortgage insurance decreases as your mortgage diminishes, whereas traditional term insurance maintains consistent coverage regardless of remaining mortgage balance.
The Integrated Advisory Network consists of progressive CPA firms, along with best-in-class professional advisors, service, and product specialists, who work together to deliver an elevated and holistic client experience. One that optimizes both their personal and professional lives with an integrated financial strategy designed to help their clients reach their goals. Reach out to your Integrated Advisory accountant if you have any questions or want to have a deeper conversation about your financial plan.