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Mortgage Insurance: What are your options?

.[caption id="attachment_2043" align="alignright" width="300" caption="Credit to Feathered Tar photostream on flickr"][/caption]Buying a new home is an exciting experience because it represents your hopes and plans for the future. For most Canadians, it also means having a mortgage and making regular mortgage payments. Often the financial institution you have your mortgage with will offer you mortgage insurance. Is it the right thing to do? Does it offer the protection you need?

What is mortgage insurance?

Mortgage insurance pays off the amount left owing on your mortgage if you pass away. Here are some facts you should know before deciding on how best to ensure that your mortgage is paid off in the event of your death:-        The amount covered by mortgage insurance decreases as the amount owing on your mortgage decreases. However, premiums DO NOT decrease, they remain the same.-        The insurance proceeds are paid directly to the financial institution.-        You may not be able to take your insurance with you if you move your mortgage to a new mortgage company. This means having to provide current medical and health evidence to become insured.-        You may not be able to insure both you and your spouse if the mortgage is registered in only one person’s name.

What is the alternative?

Having your own individual life insurance policy offers you the protection of covering your family’s financial needs including your mortgage in the event of your death. You also have the flexibility of naming a beneficiary of your choice. Your family may decide to use the benefit to pay down a low interest mortgage and invest the rest. Or they may need the finds to cover other expenses. The choice is theirs.Also, it’s important to remember that since you have an independent life insurance policy from your mortgage, you can transfer your mortgage from one lender to another without affecting your coverage. You can also choose between temporary insurance and permanent insurance which can be a part of your long term financial plan. You are able to insure both spouse for whatever amount you’d like so that you can cover other debt or financial needs as well.The choice is yours but having a discussion with someone that is well versed in both options is important.

To discuss your best options for Mortgage Insurance, please call me anytime.

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