[Video] - The Bank probably won't pay your Mortgage Insurance claim

Geoff Cook - CFP, CHAIP

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Most of the Canadian population that has "mortgage insurance" that is highly unikely to be paid should they get sick or die. You may not be aware.

If you bought mortgage or creditor insurance from a bank, mortgage broker or any kind of lender you could be at risk. These people are not licensed insurance agents, and often are trying to get you to buy the insurance simply because their manager told them they have to or because they get paid very well to do so. They will often tell you that you need to purchase the insurance to get the loan which is also not true. - Normal insurance requires you have a nurse come in and preform a few tests.

CBC Marketplace did a piece a few years ago about the risks in buying mortgage insurance or creditor insurance. The reality is that because people are not assesed until after a claim, the insurance companies can find all sorts of reasons not to pay the claim... This is called "Post claim underwriting"

Mortgage insurance uses "post claim underwriting" and underwriting is a term used to describe the assesment and approval of insurance. In the real life insurance world all underwriting is done up front, and when people are given a policy they know they have coverage.

Check out the video below to watch the CBC Marketplace segment exposing some of the many people who have been denied claims.

 



Life Insurance is a core piece of our business. If you have any questions dont hesitate to contact us

For more on the difference between mortgage insurance vs. life insurance see the chart below.

What else is intersting is that Bank mortgage insurance or creditor insurance is not less expensive, in fact, it generally costs more. We have run a chart to show the cost difference. The pricing on insurance will change over time, but this will give you pretty good idea. Remember, the amount of insurance with mortgage insurance is declining over time, where as buying individual life insurance the coverage amount stays the same.

Check the pricing differences.


To read an article posted The Toronto Star about Mortgage Insurance vs. Life Insurance - Click Here

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When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.

Infinite Financial places mutual fund transactions through Banwell Financial Inc. and Life Insurance transactions through Bridgeforce. To learn more about these relationships - click here

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