Mortgage Insurance Victoria

A mortgage is the single largest debt most Canadians will ever assume. Most consumers will take the time to shop around for good interest rates and terms that suit their needs, but not everyone bothers to do the same for the accompanying mortgage insurance.

Many simply accept the coverage that's offered by their lender without investigating other options. That's a pity, because in many cases you can obtain better coverage for a lower price from an independent financial advisor.

What is mortgage insurance for?

Mortgage insurance is about protecting your loved ones. If something should happen to you (or your partner), mortgage insurance will pay off your debt. It's a simple concept, but the details in each contract can vary significantly. Call us now in Victoria at 250-727-7197; elsewhere in BC call us toll-free at 1-800-662-8372.

What kind of coverage does the bank offer?

If you purchase mortgage insurance from your bank or credit union, you are purchasing creditor's group insurance.

You are a certificate holder. You do not own the policy. The bank may make changes to the coverage without your consent, and coverage will terminate as soon as the mortgage is paid off.

The premium you pay remains the same, but the coverage decreases along with the balance of your mortgage. You are paying a level amount for decreasing coverage.

You are not able to name your own beneficiary. If something should happen to you, the bank receives the insurance proceeds directly.

If you decide to change banks at a later date, you will have to reapply for insurance coverage — you will pay rates based on your age at that time, and if your health has changed, you may be declined.

In most cases, creditors group is based on "blended rates," meaning that smokers and non-smokers pay the same amount for the same coverage. If you live a healthy lifestyle, you will pay the same amount as someone who is overweight and smokes a pack a day.

What are the advantages of owning my own mortgage insurance policy?

An individual mortgage insurance policy, obtained directly from an insurer, puts you in control of your own coverage.

You own the policy. If you decide you want to keep some or all of the insurance after the mortgage is paid off, you may do so.

Your insurance is for a fixed amount, based on the original amount of your mortgage. If you purchase a policy for $200,000 and you die when your mortgage is only $100,000, your heirs will still receive the full $200,000.

You may name whomever you please as beneficiary — spouse, child, grandchild or friend. They receive the funds directly from the insurance company, meaning they are free to decide whether they want to pay off the mortgage, or invest the funds and use the interest to make the monthly payments.

An individually-owned policy is fully portable. When your mortgage renews, you are free to shop around for the best rate. If you decide to change lenders, your individual policy will come with you — completely unchanged from when you first obtained it. You will not have to reapply for coverage, and your premiums will remain unchanged.

An individual policy is underwritten based on your individual circumstances. Someone who leads a healthy lifestyle could end up paying a much lower rate for better coverage.

Talk to us today about the benefits of term insurance, and how it can help you keep the house you worked so hard for. Our main offices are located in Victoria and can be reached at 250-727-7197. We also have Financial Advisors across BC to help you with your Mortgage Insurance questions, call us toll-free at 1-800-662-8372.

Next Steps

Do you have any questions? Call us in Victoria or elsewhere in BC at the numbers indicated above.

Would you be interested in obtaining a no-obligation quote to see if an individual mortgage insurance policy suits your circumstances?

The Best Mortgage Insurance Is Not From Your Bank

Bank Mortgage Insurance

Personal Life Insurance to cover your mortgage

Does the Death Benefit Remain Level?

As your mortgage decreases, so does your coverage. But your premium stays the same. So as your coverage decreases, your cost per $1,000 of coverage increases

The death benefit will pay only the balance of the mortgage upon death.

YES

The death benefit of a personal plan remains level for as long as you own the plan unless you decide to decrease the coverage.

The death benefit will be whatever the face amount of insurance that has been purchased.

Am I the Owner of the Policy?

The bank has total control over your coverage and can cancel it at any time

YES

You own the coverage and are the only one who can cancel it. Any changes to the policy can only be made by you, the owner.

Can I choose the Beneficiary of the Policy?

You have NO choice as to who the beneficiary is when you purchase the bank's mortgage insurance.

YES

You have the choice of whoever you want to name as beneficiary of your life policy. Upon death, your survivor may choose not to pay the mortgage off immediately as there may be more attractive investments other than paying off the mortgage.

Will the Death Benefit pay for both my spouse and me in the event of a common disaster?

In the event of a common disaster (ie. of a husband and wife are both killed in a car accident) the bank will pay the mortgage balance only.

YES

When using personal insurance, the insurance company will pay a death benefit on both of the lives insured. For example, if a husband and wife are covered for $150,000 each for their mortgage, the benefit would be $300,000 versus whatever the balance is on the mortgage at the bank.

Is the coverage Portable?

If you want to move your mortgage to another institution, you will have to reapply for mortgage insurance. This will then be purchased at your new attained age at a higher premium, assuming you are healthy enough to qualify for the coverage.

YES

No matter where you have your mortgage, your coverage will stay with you. You do not need to worry about re-qualifying for coverage. You would only have to prove insurability if you needed to increase your coverage.

Is the Underwriting done at the time of application?

When using the bank's insurance, underwriting of the insured will be done at the time of death. In this way, more problems than not can arise as the bank's insurer will try to dispute the claim.

YES

Using personal coverage, the underwriting is done at the time of application. So in the event of a death, the insurance will pay the claim. The company does have the option of contesting in the first two years after application in the event of fraud or non-disclosure. After two years, the claim will be paid promptly.

Is the insurance plan Convertible?

YES

If you require, you can convert your policy to a permanent plan of insurance if the term policy has this feature (almost all do).

Is the premium exempt from Provincial Sales Tax?

PST is added to the premium as it is group insurance.

YES

PST is NOT payable on personal coverage.

Can I Continue the coverage after the mortgage is paid?

The day your last mortgage payment is made, your mortgage insurance terminates. If you die the next day after paying your mortgage, no benefit is paid.

YES

When your mortgage is paid, you have the option to continue the coverage, convert the coverage or cancel the coverage. The choice is totally yours.

Are there any other Options and Benefits available?

There is no option to add any additional benefits or riders

YES

Various options and riders are available to add to your coverage such as Accidental Death, Child Term Rider, Disability Waiver, etc.

Premiums

Compare your current mortgage insurance premium with that of a personal insurance plan.

Click here to obtain a quote from over 25 of Canadian Life Insurers.

Value

After reading this comparison, decide for yourself who you would rather have in control of your mortgage insurance coverage....the bank or YOU!

What is mortgage insurance?

Mortgage insurance is offered by most banks and lending institutions. They’ll offer it to you when you get a mortgage or refinance your existing one.

It’s an insurance policy that pays the balance of your mortgage to the lending institution if you, the person listed on the mortgage, passes away. Mortgage insurance provides a life insurance amount equal to your remaining debt. As your mortgage decreases, so does the payout you receive.

The cost of the insurance is based on the mortgage amount and your age at the onset of the mortgage, and the payments remain constant through the life of the policy. Essentially, you’re paying the same monthly premiums for a reducing amount of coverage as you pay down your mortgage.

And mortgage insurance is great for the lender because they are listed as the beneficiary of your policy.

How does term insurance cover my mortgage?

Term life insurance provides protection for a specified period of time. A death benefit is paid to your beneficiary if you die while the policy is still in force.

When you purchase a term life policy, you are covered for the full amount of your mortgage, not just the outstanding balance, for the life of the policy. That means you have a constant level of coverage for the whole term.

It’s usually cheaper and you choose your beneficiaries. And the proceeds from your term insurance can be used in any way your beneficiary deems necessary – not just to repay the mortgage.

Your best option

Buying a new home is the perfect time to purchase term insurance to protect your mortgage and your family. Based on its flexibility, coverage, and price, term insurance is a superior option to mortgage insurance.

So How Do The Premiums Compare?

The following table shows a cost comparison between 3 of Canada's largest bank's mortgage insurance plans versus owning a personal life insurance policy.

Male & Female - both age 32, non-smokers in good health

Mortgage amount - $150,000

	Monthly Premiums
Bank of Montreal	$28.50 + PST
RBC Royal Bank	$19.44 + PST
TD-Canada Trust	$19.50 + PST
Personal Life Insurance Policy*	$16.56 - No PST

* Standard Joint First to Die Term -10 quotation based on rates as of August 14/2007. Rates are subject to change without notice.
E. &.O. E.

Our quoting service is provided by an independent third party company which gives you access to the major Canadian Life Insurance companies all in one place.