Life Insurance Vs. Mortgage Insurance
1. Covers mortgage and many other types of loans and financial needs 1. Coverage is limited to your mortgage only
2. You can choose the amount of coverage you need for life, disability and critical illness insurance 2. You can’t choose the amount of coverage and the coverage amount corresponds to the balance of the loan
3. Coverage stays the same for the duration of the term 3. Declining coverage with each passing year based on mortgage balance
4. You can choose anyone as your beneficiary 4. You cannot choose the beneficiary and the lender is the only beneficiary
5. Your beneficiary may spend the money as they want, with no restrictions 5. The lender is the beneficiary & will repay the loan in the event of your death.
6. Underwriting is done at the time of application 6. Underwriting is done at the time of claim
7. Discounts on your premium if you are in good health 7. No discounts on premiums for healthy people
8. You get the best rates based on your own health 8. Rates are same for everyone and the older you are the higher the premiums
9. Policy is owned by you and you are the owner 9. Policy is owned by bank and the bank is the owner
10. It’s an individual policy and you are in complete control 10. It’s a pooled policy and you have no control
11. You remain insured even if you change your lending institution. 11. Your insurance ends if you change your lending institution
12. Your premiums are fully guaranteed 12. Your premiums are not guaranteed and will change as you age
13. You will remain insured even if mortgage is in default 13. Insurance will become void if mortgage is in default
14. Your insurance policy is portable 14. Insurance is not portable and will lapse if property is sold
15. Policy is automatically renewable to age 75 15. Policy is not guaranteed at renewal
16. Policy is fully convertible to permanent coverage 16. Not convertible to permanent plan and most plans expires at age 70
17. Lower cost for same coverage 17. Significantly more expensive
18. Coverage is guaranteed for the term of the policy 18. Coverage is not guaranteed