This is a typical question I get from many people looking to get “LIFE” coverage compared to their mortgage loan.

Example….. “What is the difference between the Mortgage Insurance that a Bank would offer me VS. an Insurance plan that a broker could provide ?”



Individual plan offered from an Insurance Broker…….

Insurance offered from a Bank/Lender…..

You own the policy.

You are covered under a group policy owned by the Mortgage company. They control the coverage you receive.

The policy cannot be cancelled unless you wish to cancel it.

The company owns the group policy and can cancel it at any time.

You may select any insurance amount.

The face amount can only be the exact amount of your mortgage (no more, no less).

You can choose term or permanent coverage. A term policy may be converted, regardless of health until age 65. If you have a permanent policy, at some point in time, the cash value from the policy may be sufficient to pay off the balance of the mortgage.

Most companies offer non-convertible, decreasing term (equal to the amount of your mortgage). The coverage will expire without allowing you the opportunity to purchase other insurance or provide you with cash values should you terminate coverage. Even though the death benefit is decreasing over the term, the cost remains level over the term.

You can personalize your policy by adding various attached plans:

  • Waiver of Premium,
  • Child Term,
  • Spousal Term,
  • Guaranteed Insurability,
  • etc.

Limited benefits available.

Your rates will vary depending on your smoker status. Non-smokers receive lower rates.

Generally, no distinction is made between smokers and non-smokers.

Your policy is portable. If you transfer your mortgage to another company, your insurance remains in force – no need to re-apply and prove your insurability. You are protected from the danger of losing your insurance because of a change in your health.

In most cases, if you take your mortgage to another company, you lose your protection. You must then submit satisfactory evidence of health and are subject to the current rate charged by the new mortgagor.

You appoint a beneficiary who can use the proceeds in whatever manner he/she wishes. If it is wiser to invest the proceeds rather than pay off a low interest mortgage, the beneficiary has the choice.

The proceeds are payable to the Mortgage company. In the event of death, the company is automatically repaid.

You can get a policy regardless of whether the property is your primary residence.

Companies often restrict insurance to your primary residence. If you own a rental property, you may not be eligible for coverage.

Policies are available up to age:

  • 70 for term
  • 85 for permanent
  • 85 for Universal Life

Many companies restrict mortgage insurance to clients age 65 or younger, with coverage terminating at age 70.

hope that helps ….

Michael.