Private vs Bank Mortgage Insurance

While “Bank” mortgage insurance …. might be  …better than no insurance, it has serious limitations when compared to a personalized insurance plan from a licensed insurance professional. The following chart outlines many of these differences:

Mortgage Insurance from Banks, Trust Companies or Credit Unions A Personal Insurance from Ken MacCoy, CHS
You are insured under a group policy issued by an insurance company. You are insured under an individual policy issued by an insurance company.
Your policy is subject to change by the insurance provider. The premiums can change as per the terms of the policy. The insurance company cannot change the policy provisions or the guaranteed policy premiums.
Your mortgage lender owns the certificate of insurance. You own your own personal life-mortgage insurance policy.
Your mortgage lender is the beneficiary. You name the beneficiary of your choice.
The amount of insurance protection reduces as you make (pay-down) your mortgage payments. The amount of insurance protection remains level and will never decrease; unless you specifically request a reduction.
The coverage decreases; the premium does not. In fact, when your mortgage renews the premium usually increases. If you reduce your coverage, your payments will be reduced as well.
Coverage terminates when: you sell the property, pay off  the mortgage, increase your loan, switch lenders, default on the mortgage or the group policy terminates. Coverage stays in place and can be renewed to age 75, (age 85 to 100 with some companies), it is not affected when you change homes or lenders.
The insurance protection stops when the property is sold. The insurance protection can stay in place (if required) even if the property is sold.
You are not the policy owner (the bank is), so no changes are permitted under the plan; under any circumstances. You own the policy and can change the amount of coverage, beneficiary and/or convert to a permanent insurance plan.
Insurance coverage is not guaranteed renewable for a new mortgage. If you change financial institutions, you must provide new evidence of insurability. Insurance coverage is guaranteed renewable to age 75 (age 85 with some companies) and you can keep it this long if you wish.
The banker is not usually a license insurance agent. They can usually only provide you with one (1) quotation. Ken is a licensed insurance broker and Certified Health Insurance Specialist with 30+ years insurance experience representing 16 insurance providers.

As you can see there is a big difference in the two forms of coverage…. Individual insurance is far more flexible plus includes level coverage & level premiums plus built in guarantees; while bank mortgage insurance provides decreasing coverage at increasing premiums. The reality is we can usually offer individual term insurance at double the coverage for up to 50% savings off your existing mortgage insurance premium.

Once you have decided to consider individual insurance, we recommend take a close look at Term 20 as opposed to Term 10, as the total accumulated premium outlay over 20 years will actually be lower than a 10 year term policy. Why? While the Term 10 premium is initially lower, the premium increases significantly in the 11th year.

For a No Obligation quote, please call or e-mail the following information to ken@ritepartner.com : Full Name and Date of Birth for You and your Spouse; if applicable. Also, please advise if you have used any tobacco products (and type, including marijuana) in the past 12 months; plus the balance owing on your mortgage.