Practical Financial Solutions — Your Mortgage or Your Life
By Contributor
Your family loves your home – it is the centre of your life together, after all – but that mortgage!
You can handle it. You did your due diligence and you know it’s affordable and that, some day, it will be paid off … unless: What would happen if you die? Will your family be able to pay off that monster debt?
Of course, you want your family to be able to stay in their home no matter what happens to you.
The obvious answer is mortgage life insurance. And the most obvious source of mortgage insurance is your lending institution – but before you say yes to lender provided mortgage life insurance, consider this: You could find yourself locked into life insurance that does more to protect your lender than you. A better solution – a solution that offers you and your loved ones better guarantees, usually at a lower cost — is a personal life insurance plan that insures you.
Here’s why …
Lender Mortgage Life Insurance Plan
- Lender is the owner of the policy.
- Pays benefits to the lender.
- Coverage expires when mortgage is paid off.
- Pays out only the amount owning on the mortgage at the time of the claim. Total value of coverage decreases with mortgage balance.
- Premiums can be adjusted by the lender any time.
- Lender can change or cancel police at any time.
- Policy cannot be moved to a new mortgage, a renewal or new lender.
- Your premiums are based on your age and minimum health information. At time of claim, accuracy of answers to medical questions may be examined.
Personal Life Insurance Plan
- You own the policy and designate the beneficiary.
- Pays benefits directly to your designated beneficiary.
- Coverage continues after the mortgage is paid.
- Pays the total life insurance coverage amount and the total coverage remains stable for the coverage period.
- Premium schedule is guaranteed for the life of the plan.
- Only you can cancel or make changes to the plan when premiums are kept up to date.
- Plan goes with you from one home to another, one mortgage to the next.
- Your premiums are based on your age, health and smoking status.
There’s no doubt about it: Insurance to cover your mortgage is an absolute necessity to protect your home and family. Your professional advisor can make sure you get the protection that is tailored to you, not your lender and is a perfect fit with your overall financial plan.
This column is sponsored by Roger Higgins, a BA, CFP Division Director for Investors Group in the Kootenays. For all your financial planning needs, contact Roger at 250-352-7777 of email at [email protected]
