Better Mortgage Insurance: Consider an Individual Term Life Plan
Ken and Betty live in BC and have decided to buy their dream house. Their mortgage will substantial however they have been able to negotiate an excellent mortgage rate from an ‘un-named’ financial institution.
However, they have one concern. If one of them dies, they want to make sure the mortgage can be paid off so the survivor can keep the house. While the lender does offer mortgage insurance, they must apply to see if they qualify. They even wonder if they should rely on that insurance plan, as they will lose it if they switch lenders at the expiry of their mortgage term.
Term Life Plan = Better Solution for BC Homeowners
Term life insurance offers the flexibility and benefits that homeowners like Betty and Ken need. Best of all, it stays in place, even if you switch the mortgage to another financial institution. No need to ever apply for mortgage insurance again.
Here’s how it works
The premium rates depend on your age, gender, and health. Once the rates are determined, they are guaranteed for as long as you own the term policy. For example, 10 year term rates are level for 10 years at a time; while regular mortgage insurance rates generally increase every time you renew the mortgage.
Instead of being added to your mortgage payment, your premiums can be deducted monthly from your chequing or savings account , or billed annually at reduced rates.
With regular mortgage insurance, the death benefit is paid directly to the lender to pay off the mortgage. With term insurance, if Ken dies, the death benefit is paid directly to Betty; the beneficiary. That means that Betty can use the money to the greatest advantage. For example, she can repay all or part of the mortgage, or invest the proceeds.
Also, with regular mortgage insurance, the amount of death benefit reduces as the mortgage balance reduces. With term insurance the death benefit remains at the original level. You can choose the timing and amount of reductions as your needs change.
And since the policy stays in effect even if you switch mortgage lenders, your coverage continues as long as the premium is paid, up to age 80. Even better yet, coverage can be converted to a permanent plan without evidence of good health up until age 65; or 75 with some companies..
The benefits definitely work to your advantage
Low cost protection – Term insurance offers one of the lowest rates per dollar for life insurance.
Preferred rates – You can benefit from even lower rates for a healthy lifestyle.
Flexibility – You can choose between a 10, 15, 20, 25, 30, 35 or 40 year term, renewable to age 85 or older regardless of your health.
Convertible – You can convert to permanent life insurance if your needs change.
Portable – You can keep your policy even if you switch lenders, or your needs extend longer than the mortgage.
Peace of mind – Your family is protected in case of the unexpected