Although life insurance is a vital part of financial planning, we should be aware that not all life insurance products are created equally. This is especially true when it comes to buying mortgage life insurance from banks and other lending institutions. In some situations, the coverage your clients think they have, may in fact not cover them at all.
Most families are completely unaware of the potential risks of owning mortgage life insurance offered by the banks. The process to put the insurance in place is rather easy, as it is offered at the time of purchase or renewal of an existing mortgage, and is based on a few simple questions.
However, in most cases the mortgage professional who is selling this important coverage does not require a license, and quite often has little training or understanding of the product they are offering to their clients.
The biggest problem with buying mortgage life insurance from a bank is Post Claim Underwriting and unfortunately, the only way to truly know if the coverage you’ve purchased will pay at the time of a claim, is to make a claim.
If you have not already viewed CBC’s documentary on mortgage insurance, please visit the link below and review the attached marketing piece, comparing mortgage insurance to personally owned life insurance.