This topic has been a controversial one for a few years now and I thought that some facts might help to clear things up.
Many Canadians own homes and have a mortgage. When we get a mortgage we are also offered “mortgage” protection from the banker or mortgage salesperson. This is where the controversy starts because a salesperson who is unlicensed to recommend any insurance solution or product is now stepping into an area where they do not have expertise. This is a major issue because life insurance is a significant part of our financial planning and we’re working with someone who doesn’t have credentials and is only able to “sell” you one product (more on the “product” in a minute). This is like wanting to speak to an investment specialist about your investments, but being directed to the bank teller who can only point out how great the GICs are doing…unlicensed and inexperienced and working for the bank. This is a Lose, Lose, Lose situation.
The Problematic Product
The mortgage insurance offered by mortgage companies (banks and other institutions) isn’t actually an insurance policy or contract. It isn’t legally binding on any insurance company and there are no guarantees. These companies do what is called “post-claim underwriting”, which means that after the insured person dies, then they will inspect to see if he/she would have qualified for the insurance. And just like in any business, they are looking for a way to not pay out any money. The slightest discrepancy on the application may be enough for them to deny the claim – leaving your family in the lurch and potentially forcing them to sell the home despite the market conditions. When we sign up for this type of insurance we answer 5 or 6 easy questions about how healthy/sick we are and we begin to pay the premium for our so-called “protection”. The bank is the beneficiary and the benefit will decrease each year…while the cost stays the same. Another Lose, Lose, Lose situation.
The Solution
When we use an independent advisor we immediately have someone on our side who isn’t working for the bank or an insurance company or mortgage institution. This advisor is able to find the proper insurance product that will address our risk at the best possible price…Which is always less expensive than the insurance offered by our mortgage representative.
When we purchase insurance from an actual insurance company through a licensed independent advisor, we are offered a contract. This contract is GUARANTEED. This means that the premium payment is guaranteed, the benefit is guaranteed and the insurance company can’t cancel it. Now we’re in a Win, Win, Win situation. The licensed advisor is able to take you through a proper application process which involves many medical questions, and a Registered Nurse may even be scheduled to come to your home (at your convenience) to complete blood work and a urinalysis. In some cases (for large amounts of insurance) more tests may be required. Sure these tests are intrusive and inconvenient, but they are the basis from which the insurance company is able to offer you a guarantee. It’s this kind of disclosure which protects you from having a claim denied by the insurance company.
In the end you will have a guaranteed insurance policy where you choose the beneficiary (not the back), the benefit will not decrease, and you’ll pay less than other stuff. This is a WIN, WIN, WIN!
To get a quote on your mortgage needs to compare with what you’re currently paying click here.
For more information on this issue and to see a CBC Market Place report, click here.
By Jonathan at www.CanadianLifeQuotes.com and www.IntegralFinancial.com
jonathan@canadianlifequotes.com
jonathan@integralfinancial.com
E.&O.E
*This article is for information purposes only and is not intended as specific advice for any individual. Please review your policy contract for complete details of your existing coverage and speak with a licensed professional if you have any questions or concerns.