Thousands of crash test dummies have been sacrificed for our driving safety and I’m grateful every time I drive! We also need to crash test your financial plan against the catastrophe caused by disability, critical illness and death. This includes properly structuring your mortgage life insurance.
The risks are very real. Here are numbers for non-smokers before the age of 65:
- A 40-year-old male has a 34.7% chance of long-term disability. He has a 27.8% chance of critical illness and 7.0% chance of death. There’s a 59.3% chance that he will die, get disabled or critically ill before age 65.
- A 35-year-old female has a 40.3% chance of long-term disability. She has a 20.5% chance of a critical illness and 5.6% chance of death. There’s a 55.8% chance that she will die, get disabled or critically ill before age 65.
Families can be crushed by these events. Life, disability & critical illness insurance replace a person’s income when disaster strikes. They can also reduce or erase the stress of a mortgage.
Mortgage Life Insurance Options!
Banks routinely offer mortgage life insurance when finalizing your mortgage.
You don’t have to apply for the coverage, but many people simply give in to the pressure.
Here are the key reasons to plan your insurance affairs apart from the bank:
- You’ll be able to properly structure a plan by working with a licensed un-biased insurance professional.
- You will control all aspects of coverage including the right amount, type, options, time-frame and beneficiaries.
- Your plan will be portable without re-applying when you change banks (and you probably will).
Beware the Bank’s Coverage
By taking the coverage issued through your bank, you are not in control:.
- The bank is beneficiary. The coverage is tied directly to the mortgage amount.
- There is usually no time to think about it.
- The bank’s coverage ignores your other insurance needs.
- The person signing you up will probably not be licensed to give insurance advice. Furthermore, there is no proper planning process.
- Your coverage is usually not portable when you switch banks. You would need to medically re-apply. This will be a problem if you develop any health issues.
- You will miss out on the broad options in our Canadian insurance marketplace.
We have covered these serious shortfalls in our post “7 Things the Banks Don’t Tell You About Mortgage Protection Life Insurance.” For further clarity, you can also download our detailed report below.
Your priority is to protect your interests and those of your family – not the bank. A glossy mortgage life insurance brochure does not help you. It is better to work with a specialist who can skillfully analyze your needs and help design the right plan for you. For best piece of mind, an unbiased broker can structure a proper plan and source the best options available in the insurance marketplace.