This week on the CBC they will be airing a show about Mortgage insurance – Wednesday February 6, 2008 at 7:30 (http://www.cbc.ca/marketplace/). I am told that the focus is on Bank Mortgage Insurance Application forms and how many have been poorly completed and claims have been denied. I will state for the record that I have heard of bank insurance policies paying out after a death, yet rather than just getting your mortgage paid off, wouldn’t you rather leave more than that behind?
If I died yesterday and my mortgage was paid off by the bank, how would that leave my wife? My funeral would cost about $15,000 – $20,000 (more because I want a bust of my head as a tombstone). She wouldn’t have any more mortgage payments but would have to pay off or return my leased vehicle (with whatever cost that entails), pay the bills that I normally do and continue on with her life. What about our children’s education? What about their development (sports, activities etc)?
Each situation is different and that is the one major disadvantage of the bank application – it just asks you 3 or 4 questions and expects to insure you based on that!
Getting the mortgage paid off is a great thing – but you can do so much more with your own policy. Your own policy can have cash value building up, it can be paid off in 20 years and kept for life. Your own policy can have a fixed cost for 10, 20 25 or even 100 years!
When choosing life insurance, choose carefully (see my article on November 16th for a comparison of 2 types of mortgage insurance). I know that when you are getting your home, life insurance is the last thing on your mind. Who thinks about dying when so much living is happening?
Having signed all the documents in November, I know that the mortgage insurance questionnaire is lodged in with the mortgage documentation – waiting for people to just sign it and move on.
If you don’t want to think about insurance at that moment in time – DON’T! It is okay to decline it – your mortgage won’t depend on it! It is like the bank asking you to “SUPERSIZE” your order.
Get settled, organized and seek some council – the more research you do, the better. Once you are done researching, speak to someone. The products are going to be similar across the board.
You will have to be comfortable with the agent you speak to, the money involved and ultimately the plan created for you.
While I can’t confirm the complete content of the show (and I am certain that it will be sensationalized) watch it anyway on Wednesday – it may be informative!