Bank Coverage vs. Private Coverage. What you need to know!
So let's get on to a mortgage insurance discussion. Did I say mortgage
insurance? Ah yes! Yes, it's a unique name given to normal, ordinary life
insurance, couched under a very nice sounding name - which makes a whole lot of
difference to people wary of "life insurance." So, they're not buying
life insurance-no, no, they're buying mortgage insurance. I wish there were
many more such unique names for good old Life Insurance which would persuade
people to buy life insurance and protect their loved ones and their estates.
Apparently, people do not want to talk about death; so life insurance is
the last topic for discussion unless you get a close call from the Creator, by
way of a heart attack or stroke. Mortgage insurance is not mandatory at your
bank, or anywhere for that matter. All you have to do is sign a waiver and
you're off to the races. The waiver releases the lending institution of its
obligations to offer you a plan that would take care of your family in the
event you had a premature death.
Let's get back to the statistics. Out of 1,000 people aged 30, 125 will die
prior to the conclusion of a 25 year mortgage. And surprisingly, despite having
this fantastic name to this very important plan there are thousands of families
lacking protection and leaving their dependent families open to the risk of
losing their homes. I am certainly glad that due to the plans aggressively
marketed by the banks, many families are protected. Or else, there would be
thousands of unprotected families who would end up homeless.
If a mortgage is not paid immediately, in the event of your death, it will
become a huge liability to the family.
Choices: Let's visit the choices your family would have to make in such a
situation.
1. Will the surviving spouse/partner carry on the entire burden of the
mortgage and will the bank accept the risk? If two incomes together found it
difficult to make both ends meets, how can one income possibly be adequate?
2. The family could sell the house, relocate or rent somewhere else. Will
there be a buyer for the house? What about the cost involved in selling the
house? Will there be enough money after selling or will the family owe the
bank?
3. Sell the house and move in with the relatives. Not the best alternative
and how many people have philanthropic, generous relatives willing to take in
another family? Not many, I can bet.
4. It's an accepted fact that for most people their house is their most
valuable asset and they protect it by way of mortgage insurance.
By the way, I'm sure you have heard this statement from a friend saying
that someone they knew had died and that the surviving family does not have any
money. You can immediately conclude that those folks did not have insurance and
must have probably snubbed many insurance advisors like me. If one truly loves
his or her family, a mere $15.00 a month can prevent such an eventuality.
o Why take advice from a bank official, whose experience is not insurance?
Before we discuss the nitty-gritty of the plans marketed by the banks and
other lending institutions, let's get one thing straight. Would you go to your
dentist if you are ill? Or, would you go to your family doctor? True, both are
doctors, but their lines of specialty are totally different. Why, then, would a
person take advice from a bank official (whose expertise is banking and NOT
insurance) to purchase protection of his/her most valuable asset?
Don't get me wrong-bank officers may be extremely knowledgeable in the
financial aspects of banking related issues, but insurance issues are far
beyond their scope. They are only doing their duty by offering the mortgage
plans available.
Therefore, getting advice and signing an extremely important document which
can affect your entire family's financial future is something you have to take
really seriously. An Insurance Advisor, on the other hand, is qualified to give
you better advice on insurance related issues.
o Plans offered by an Insurance Advisor provide coverage that remains level
for the term you select.
Mortgage insurance plans offered by banks relate to your mortgage balance,
and obviously as your mortgage drops so does your insurance coverage. In this
case, if you are happy about reducing your mortgage, remember that the
insurance company is equally happy because this reduces their liability.
Individually acquired plans are tailor made for you personally and so, if
you are healthy, you get a better rate. Unfortunately, the plans that banks
recommend are group plans. It does not matter how healthy you may be compared
to others in the group.
o Plans we offer have premiums guaranteed and cannot be changed by the
insurer.
As you might be aware, group plan premiums are generally not guaranteed.
Mortgage insurance plans are group plans.
o Individual plans do not reduce their benefits and so the premium remains
the same.
Mortgage insurance plans offered by banks relate to your mortgage balance,
and as your mortgage drops so does your insurance coverage, as mentioned
previously. However, the premiums that the bank charges you remain the same.
Does this seem fair?
Most bank plans leave the insurance carrier with loopholes to decline your
claim.
o Individual plans will require complete medical check-ups done by
qualified medical professionals, at the time of application, which will save
your beneficiaries from problems later. It also protects your interests and the
interests of your beneficiaries at a later date. Qualified Insurance Advisors
will coach you on most medical questions so that your answers are accurate and
appropriate.
Most bank plans can be set up with a few condensed medical questions-which
leaves your bank's insurance carrier with loopholes to decline your claim.
o Our plans do not require you to pay additional PST. The premium offered
is the final figure, no PST surprise.
Premiums quoted by group insurance plans do not include Provincial Sales
Tax. Therefore, just like the rest of your regular purchases PST sneaks in
silently to add to your total. So, when you shop for a price, please take this
into consideration. A PST of 8% could buy you a lot of additional insurance
coverage OR reduce your cost significantly.
With our plans, the premium offered is the final figure-no PST surprise.
o The plans offered by an Insurance Advisor insure both spouses separately,
and so, insurance is paid on both deaths, for instance in a disaster where both
the insured die, two separate death claims in the same amount will be paid,
thus doubling the benefit.
Bank mortgage plans are "first to die" plans-i.e. the plans pay
and cease when one person of the two insured dies. Obviously you would agree
that that's the purpose of this insurance. Sure. However, wouldn't you prefer a
better option?
For example: a 45 year old male and a 42 year old female insured for a
mortgage of $250,000 "first to die" would pay $49.50 per month. By
insuring them separately for two amounts, the cost would be about $52.00 per
month. Wouldn't you agree that it's worth an additional $2.00 month to double
the coverage, so that the beneficiaries receive $500,000? That's the advice you
will receive from a qualified insurance professional.
o The plans an Insurance Advisor offers can generally be converted to a
permanent plan, without the necessity for further medical evidence. So if you
develop a medical condition which would disqualify you for insurance, this
feature would be of great importance in the continuation of your insurance
policy, thus protecting your family.
Bank mortgage plans are strictly rental (term) plans and that's about it.
You do not have a choice.
o Our plans are traditional life insurance policies, the proceeds of which
go to a named beneficiary tax free. The insurance policies are creditor proof,
thus totally negating undue expenses such as probate fees.
When insurance proceeds from a bank plan are paid towards a property, those
proceeds may be open to probate or creditors.
o With traditional life insurance plans, the choice of coverage amount is
always yours and does not require mortgage documentations.
Again, as the coverage of bank plans relates to your mortgage balance, you
do not have a choice. For instance, if you wanted an extra amount of coverage
to protect your family, you would need to purchase it from elsewhere and
unnecessarily end up paying an additional amount of money by way of policy
fees.
o With the plans an Insurance Advisor offers, the choice of using the
benefit amount anyway you choose is yours, and you can make any changes as and
when you need. For instance, when you die, your spouse has the option of
whether he/she wishes to pay off the mortgage in its entirety or not, as per
the spouse's needs at the time.
With a bank policy the bank is the beneficiary; your family has no choice.
o Our plans are portable. They are not tied to any property. They are based
on your life-not your house or any other asset.
When you purchase a mortgage insurance plan from a bank, you are confining
the coverage to a particular property; hence, the moving to another property
requires another contract.
o Refinancing does not affect the insurance plans that an Insurance Advisor
will offer.
Refinancing alters your mortgage balance and so the contract of a bank plan
stands void. There will be a rate increase in line with your current age, with
additional underwriting. You in fact may not be able to get insurance again as
your health conditions may have changed.
o We offer you choices of coverage ranging from 5 to 21 critical illnesses
with the flexibility of purchasing the amount of coverage that you can afford.
Also, you can claim two benefits separately-i.e. if the insured gets a critical
illness and claims, then dies after the claim is paid, the death benefit also
gets paid.
Some institutions generally add the critical illness benefit to your life insurance coverage, giving you no choice
with regard to the amount you may wish to purchase according to what you can
afford. It also does not allow you to claim two benefits-i.e. if you collect a
claim on a heart attack which is a critical illness benefit and you survive,
then the contract ends. Also, the number of critical illnesses covered is
limited.
o A qualified Insurance Advisor can draw out a plan which allows you the option
to stop paying premiums and still continue your policy.
Bank mortgage insurance plans are term products which have no cash values,
and so, if you stop payments, the policy will immediately lapse.
o Most insurance agents will service you effectively and most of all take
care of a claim, personally assisting your family when in dire need. Most
Insurance Advisors' actions will definitely speak better than bank TV
commercials. They will assist you in the creation of an estate and certainly
will meet you one-on-one and at your choice of venue or at your home. Basically
you have hired the services of a professional in this line for the rest of the
term of the plan you have purchased.
Can you recall any bank making personal contact with you such as sending you
a birthday card, a calendar, newsletters, or even making a courtesy call, etc.?
The only time you would hear from them is possibly at the time of renewal,
which would mean an additional sale for them.
It's worth noting that traditional life insurance policies from an
Insurance Advisor offer a discount of approximately 9 per cent if the premium
is paid annually, thus reducing the cost significantly. This discount factor
does not arise with a bank's mortgage insurance plans, which are generally paid
on a monthly or biweekly basis.
I hope that when it's time for you to consider "mortgage
insurance", that I have been able to shed a little light on the subject to
help you with a better solution.
11:41 AM
ENSA MAROC
