More specifically, let’s talk about life insurance with respect to your mortgage. Life Insurance will cover your mortgage debt if you die or become disabled.  Generally, lending institutions try to sell homeowners this type of insurance when they sign up for a new mortgage. Insurance premiums are then seamlessly added to their monthly mortgage payments.  But wait, is this the best option? Well it depends…Jennifer Rossides, an accredited Mortgage Broker, will offer her opinion on this matter.

Life Insurance. Protect your prized assets

Life Insurance is a sound financial strategy

and an important or vital tool for your overall financial plan. Sadly, it is overlooked or misunderstood, by many. There is no question in my mind that you require adequate life insurance coverage.  Now let’s talk about what is best, and what is second best. Personal circumstances, like your health, may limit your choices.

Mortgage Protection Insurance

In this type of insurance, the lending institution is the beneficiary.  The death benefit bypasses your family/beneficiaries and goes directly to the lender to pay off the mortgage. It takes the guesswork out of everything as it matches the mortgage balance to the payout.  But this narrow scope is also a drawback. What about if your beneficiaries wanted to keep the mortgage and could have used the money for something else? Also, the payout decreases as the mortgage balance decreases, but often the monthly premiums don’t.  Finally, if you change homes in the future, you may be uninsurable at that point and set your family at risk. An example of this type of coverage is MPP.

Term Life Insurance

Term life insurance provides your beneficiaries a tax-free, lump sum amount. They can use it for whatever they need. That may be paying off the mortgage, but it could also mean they can do what they want. The term is important because as you get older, the premiums will change. It is important to keep this in mind and the fact that you may become uninsurable at some point in the future. It is a flexible alternative to mortgage protection insurance if you need to cover more than just your mortgage. An example of a provider for this type of coverage is Manulife.

If you are unable to get a competitive term life insurance rate due to health issues, a mortgage protection insurance policy may help. The worst thing you can do is ignore this need.  The second worst thing you can do is rely on your company’s death benefit. “I have plenty of insurance through work; two-times/three-times my salary is enough”. I hear this a lot. This is not a sound financial strategy.  

To summarize, too much insurance is not necessary. The adequate amount, within a sound financial overall strategy is essential. All your questions and whether this is right for you can be answered with the help of a qualified, accredited Mortgage Broker. Please give Jennifer Rossides a call at 613-867-8076 or send an email at jenr@lendinghand.ca and I can help you find a Smart Mortgage Solution that’s right for you.

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