The main goal of a personnal life insurance isn’t to insure you mortgage, its purpose is to insure you. After all, you’re the one making the mortgage payments.
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Mortgage Insurance |
Personnal Life Insurance |
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| I’m paying the premiums, therefore i’m the contract holder, right? | No. You’re covered under a collective contract and the lender is the beneficiary. | Yes. You are the holder of the contract and you decide who is your beneficiary. |
| Is my coverage flexible? | No. The lender only insures the balance of the mortgage loan.You cannot modify, renew or transform your contract. Shoul you transfer your mortgage to another lender, you may not transfer your mortgage insurance. Your coverage ends when the mortgage is paid off or at the end of its term. |
Yes. You choose the amount of coverage without regard to the mortgage loan amount. You may augment or reduce your coverage, renew or transform it into a permanent protection.. Should you negociate or reimburse your mortgage, sell your home, you may still choose to maintina your protection.. |
| Can my beneficiaries use the insurance proceeds for other use than the reimbursement of the mortgage? | No. The death benefit proceeds go directly to the lender to reimburse the mortgage. | YesI. The death benefit proceeds go directly to your beneficiary who then decides how he will use the money. |
| Is my coverage guaranteed?/strong> | No. Your insurance and premiums are not guarantied. Your lender can make modification at all times. | Yes. Your coverage and premiums are guaranteed for the length of the contract. You are the only one that can modify your coverage. |
| I take good care of my health and don’t smoke. Will that make a difference on my premiums? | No. Since most mortgage insurances are usually offered under a collective contract, you pay the same premiums regardless. | Yes. Your premiums are calculated according to your age, your health condition and your smoker or non-smoker status. |
Normand Chadwick ,A.V.A.,
Financial planner
