Should I take out mortgage life insurance offered by my bank?– Get a quote today

A reader will soon buy a house and his bank offers him mortgage life insurance to insure his loan. He doesn't know if he should accept or seek an option elsewhere …

First, let's define what mortgage life insurance is. It is insurance that is used to pay the mortgage balance in the event of your death. The heirs will therefore have a building free of mortgage debt.

How does life insurance work for a financial institution?

Bank insurance is very accessible and simple to take out. Just answer a few medical questions and you're guaranteed. The only catch is that if you were not insurable at the time of signing, they will investigate only after your death; they can then refuse to pay the mortgage and refund only the insurance premiums paid. Your estate will therefore have to fight against the insurer, a David-style battle against Goliath!

There is another type of mortgage life insurance offered by private insurance companies.

The 10 advantages of taking out private life insurance

1) You have medical tests to pass before being accepted by the insurer. They therefore check your state of health before granting you a policy.

2) You are covered even if your condition deteriorates over the years throughout the police coverage.

3) Depending on your age group and your state of health, private insurance often costs less than that of financial institutions, according to Alexandre Galasso of Forza Insurance & Financial Services Inc., financial security advisor.

4) You are not attached to a particular bank; you can change at any time if another financial institution offers a better interest rate, for example, and keep your privacy insurance.

5) The amount of insurance is not declining. This means that if you have two years left to pay and the mortgage balance is $ 10,000, the bank will pay off $ 10,000, while the private insurer will keep the same starting amount, for example $ 200,000.

6) Personal life insurance can also be used to pay the amount of taxes payable by the estate upon death.

7) The insurance can be tailor-made for you.

8) With private insurance, you can cover all of your insurance needs with one policy. Very practical for those with several buildings. We can also secure other income.

9) You can choose the beneficiary of the insurance.

10) Your private life insurance advisor (financial security advisor) holds training and an insurance license with the Autorité des Marchés Financiers (AMF), while at the bank, a clerk, most of the time, sell this insurance.

Advice

  • Do you already have life insurance with your employer? Take the time to assess your coverage. Can you increase your coverage for the new purchase you want to make?
  • When you own a rental property, other than your home, that building will not be exempt from tax like your personal home upon your death. The tax authorities will then consider that you have sold all of your buildings. Have your future tax bill analyzed to see if the estate can pay the tax without selling your properties.