Life Insurance vs. Mortgage Insurance
For many Canadians signing your mortgage agreement is the start of the biggest financial obligation you will ever make in your life. And although it might be easy to put a price on a property, it is next to impossible to put a price tag on is a safe and loving home. That is why many mortgage holders choose to insure their investment with life insurance so that they know that home would continue to be safe and secure for their family, no matter what.
Mortgage Life Insurance
If you’re looking for life insurance for your mortgage than this may be the obvious choice given its name. Mortgage life insurance is a specific form of life insurance that covers the balance of your mortgage (also referred to as a reducing balance). If the person listed on the mortgage were to die, the remainder of the mortgage is paid out, which secures the home financially.
Term Life Insurance
The closest substitute for mortgage life insurance with traditional policies is term life insurance. The biggest advantage of term life insurance is that its death benefit never decreases. Instead it is remains the same for the entire length of the policy. In deciding on the total amount of coverage you need with term life insurance, simply adding the cost of mortgage payments is ample enough coverage to cover your home while giving you more flexibility.
Since mortgage life insurance simply covers the mortgage balance, it cannot cover final expenses, additional estate taxes and other outstanding debt. With term life insurance, other most pressing needs can be taken care of instead at the discretion of the beneficiary.
Deciding what is your best option boils down to your own individual needs. For the majority, shopping around with the help and advice of a professional advisor means better coverage with term life insurance. But, some situations still would dictate that mortgage life insurance may be a better choice. The important thing is to explore your options and there is no better way to do this than with a licensed broker. Far from being an salesperson, today’s brokers are trained professionals who act as guides and leave the final decision up to you.