Mortgage Insurance
This type of insurance is offered by lending institutions to customers taking out a mortgage. If the Mortgagor dies before the mortgage is paid off, the death benefit will be used to pay off the balance owing under the mortgage loan. A few points to note: the amount insured will always be the mortgage balance owing, no more, no less. The mortgagee (lender –ie, your bank) will always be fully paid with no money leftover for your loved ones or estate.
Should the mortgagor have health problems that would prevent them from obtaining life or mortgage insurance, they will be captive to their mortgage lender for the full term of the mortgage –in other words, no shopping around for better interest rates.
Mortgage Insurance offered by a lender is often more expensive than individual life insurance.
| Mortgage | Individual |
| Decreasing coverage | Level Coverage |
| Underwriting done after claim (chance that claim may be denied) | Underwriting done before policy issued |
| Premiums a bit high for covered amount | Premiums remain the same for coverage amount over life of policy |
| Often sold at the bank | Should be purchased from a licensed and experienced Life Insurance broker |
