If you’re buying a home, you may have heard of mortgage life insurance--and all the reasons you shouldn’t buy it. But the market has changed, and so has mortgage life insurance. While it’s still true that bank-offered MLI has issues, products like 20/20 Mortgage Life Insurance are changing the game. So what used to be fact about MLI that’s now fiction?
Myth #1: The Bank Owns Your Policy
When a bank offers you mortgage life insurance, they will list themselves as your beneficiary because the purpose of the insurance is to pay off your mortgage, and that money would go to them. While this isn’t the worst set-up, your family might have other ideas about what to do with your life insurance money. 20/20 gives them the option, since you can name your beneficiary.
Myth #2: Your Coverage Can Be Denied After You Make a Claim
This one’s responsible for most of mortgage life insurance’s bad reputation and, in our opinion, it's deserved. Banks use post-claim underwriting, so that when you file a claim after years of paying premiums, they can tell you that you weren’t qualified to have your policy and deny your payout. We find that unethical, and we don’t do it. 20/20 Mortgage Life Insurance is underwritten by Assumption Life Insurance at the time of the application, not after you make a claim, so you can rest easy knowing your coverage is there when you need it.
Myth #3: Bank Employees Are Just Trying To Upsell
Most bank employees will ask you about mortgage life insurance when you’re signing up for a mortgage, and often they don’t know the ins and outs of insurance policy. They’re offering a product related to what they’re selling, but that doesn’t mean they know it. You wouldn’t go to a bank when you need a doctor, so why go to one when you need insurance? They’re different industries. We’re an insurance company offering a range of life insurance products.
Myth #4: Your Coverage Ends When Your Mortgage Is Paid Off
It is true that if you pay off your mortgage, your policy terminates. However, you’ve paid off your mortgage, the largest liability facing most Canadians, so congratulations! That said, term life insurance, which MLI is most often compared to, is also term, as stated in the name. In fact, most life insurance policies are designed to protect against premature death, so if you outlive your policy you’re technically successful. You are able to supplement MLI with additional insurance coverage.
Myth # 5: I Don't Need It
The point of life insurance is to cover you if something happens to you accidentally or in a premature fashion. That’s why it’s cheaper to get insurance when you don’t think you “need” it --when you’re young and/or healthy. If you wait till you “need” life insurance, it may be harder to get coverage because insurance companies will deem you a liability if it seems like they’ll have to pay out. (Yes, that’s a fancy way of saying that if the insurance company thinks you’re likely to die soon, they may not cover you, and while it may seem callous it’s in the insurance company’s financial best interest to want to reserve payouts.) While 20/20 Mortgage Life Insurance doesn’t disqualify you for pre-existing conditions and can include disability or critical illness coverage.
You may also think you don’t need life insurance if you don’t have kids to take care of. But if you have aging parents, they might be counting on you to help them in their sunset years. Or, if you’re part-owner of a business and your partners would need to buy out your share in the company, it might help to have life insurance that can help them do it. 20/20 Mortgage Life Insurance allows you to name your beneficiary so those are options.
If nothing else, even a nominal life insurance policy (or the decreasing benefit of a mortgage life insurance policy) could cover your funeral expenses and burial fees.
Get In Touch With the 20/20 Team For A Free Quote
20/20 Mortgage Life Insurance has changed the landscape of mortgage life insurance, and many of the myths surrounding the product have fallen away. Get a quote and see how you can save up to 25% switching to 20/20 Mortgage Life Insurance.
