When it comes to purchasing a home, there are a lot of factors to consider. From moving costs to CMHC insurance, it may seem like you and your family are being subjected to an endless barrage of hidden fees. In this week’s article, we want to discuss a common service you may be offered while you’re navigating your mortgage: mortgage life insurance.
Mortgage life insurance is not connected to CMHC insurance, which protects your lender in the case you default on your mortgage. This type of insurance is designed to protect you in the case of disability or death. Once enacted, the payout will flow to your lender and be used against your outstanding mortgage, either as a lump sum or in monthly payments. One thing to note is that as you pay your mortgage over time, the payout will get smaller. When considering a mortgage life insurance plan, here are some questions you should ask:
What exactly does this policy cover? Ensure that you know exactly what this service provides. Is it coverage for death and disability? Are there instances where coverage will not apply? Combing through the policy and having a professional on your team to help you translate it is an important step to take before signing anything.
Is the policy post-underwritten or pre-underwritten? Post-underwriting means that your mortgage insurance provider could investigate a claim at the time it happens to see if the person was insurable before a payout occurs. Pre-underwriting is basically pre-approval that the insurance company is committing themselves to the insurance at the time you sign.
How much will this cost? Insurance premiums are typically dependent on the age you are when you sign the contract. Make sure you know how much it will cost you and if these costs are subject to change at any point.
Will I need to renew my policy when I renew my mortgage? In many cases, you will need to renew your policy at the end of your mortgage term. Check with your potential insurance provider to see what conditions will apply. For example, will the premiums increase, and if so, by how much?
Regardless of which provider and policy you choose, mortgage life insurance is bound by federal laws to ensure that this service is fair to homeowners. At Source Mortgage, we can help you decide if mortgage life insurance would be beneficial to you and help you determine which policy would offer the most advantages. Contact us today to get started!
Source was absolutely great to work with - went above and beyond to help us get everything done when buying our new home. Highly recommended!! Chad and Jenelle Richards Jan 09 2013
Chad and Jenelle Richards
Added January 23rd 2013
|V.R.M.||Prime-.65 or 2.35%|