Last week one of my best friends purchased a home. His first home.
I called him up and said congrats!
He's 29 and he's pretty healthy - in fact we both played soccer together for many years.
He knows I'm a life insurance broker, so when I called him to congratulate him, he asked me about mortgage insurance - smart man!
The most common form of life insurance is term insurance.
It's cheap, simple to understand, and gives people full control over their policy.
You have three options if you want to insure your mortgage:
1) You can use a bank.
2) You can use term life insurance.
3) You can choose to not insure your mortgage at all.
Chris (my pal) chose option #2.
Here's why he didn't choose option #1 - his bank.
Getting insurance with a bank is easy to get - 90% of people will automatically qualify for it. You simply answer a 10-minute questionnaire and like magic, you're insured!
(I know this because I once worked as a financial advisor at CIBC).
The downside, is you don't actually have any control of your policy.
If something were to happen to you, your bank will pay off your mortgage - the bank is your beneficiary.
Secondly, your premium automatically increases every year.
Many Canadians choose a bank to insure their mortgage simply because they feel it's their only option. As years pass, Canadians end up spending thousands of extra dollars every year with their banks insurance plan.
Here's why he didn't choose option #3 - no insurance.
This might seem pretty straight forward.
He purchased his house with his partner.
If something were to happen to him, and he has no insurance on his mortgage, his partner is left to pay his mortgage.
Unfortunately, this is an all too common story we hear about in the insurance world, and it's heartbreaking.
Here's why he went with option #2 - term life insurance.
With a term insurance product, he's got a lot of control over his policy.
He can pick a beneficiary. Meaning, if something were to happen to him, his beneficiary will receive a cheque from his insurance company, and his beneficiary is free to do that they wish with that money.
Secondly - his premiums remain level.
The price he pays in year 1 of his policy, will be the price he pays in year 2,3,4 etc...
For example, if he purchases a 20-year term insurance product, the price he pays in year 1, will be the same price in year 20. And since he's young, his premium will be pretty inexpensive (as you'll see shortly).
Lastly, he didn't just insure his mortgage. He also increased his coverage amount to cover any potential costs his partner may incur should something happen to him.
- if they plan to have kids, and those kids want to go to university, thats about $40,000 per child for 4 years
- he took out a loan to purchase a car, so he included the total amount of the loan in his coverage
See what I mean about having full control?
I helped Chris obtain a term-20 insurance product, covering all of his existing and potential future liabilities, for a total cost of $465.72/year.
The best part is, he was automatically approved, and the entire process took 20 minutes.
For the majority of Canadians, a mortgage will be the biggest liability in their lives.
Why not take the final step to make sure no one else has to pay for it if you're not around?
Especially if it's your spouse or kids...
If you'd like to have a conversation and see whether term insurance is right for you, feel free to give me a call or text me at 647-393-3474.
You can also complete the insurance intake form below to get the process started!
As always, thanks for reading!