Mortgage Insurance vs Term Insurance
A life insurance broker will help you determine how much life insurance you need to protect your new investment so that if the unexpected happens, your loved ones are protected.
For most of us our homes are the largest purchase we will make. When you’re getting your mortgage, the lender will offer you mortgage insurance. Before you say yes you will want to explore your term life insurance options with an experienced broker.
Term life insurance is a type of life insurance coverage that provides protection for a specific number of years. Traditionally term insurance was limited to 10 year or 20 year terms but today there are many insurance companies which offer customized term lengths. If (unfortunately) someone dies, the insurance pays out tax free to whomever they designated in the policy. The person receiving the money from an individual life insurance plan can use it however they see fit. With mortgage insurance, it is the lender who is paid and they use the money to surrender the mortgage. Why would you want your bank to get paid rather than a loved one?
Term insurance is cheaper for first time home buyers and millennials when compared to mortgage insurance purchased through a bank or mortgage lender. It stays with you if you move, change houses, or change lenders. With mortgage insurance, you have to reapply at new, possibly much more expensive rates, when you switch lenders.
We at Life Insurance Ottawa can help you determine whether mortgage insurance or term insurance is best for you.