Your home and other properties are probably the biggest investments that you own. The needs to finance, refinance or consolidate debt, through mortgages, lines of credit, etc. are ongoing. You may have mortgage insurance at the bank and group insurance at work.

Here are the reasons why personal life insurance may be a better alternative to bank mortgage life insurance or other creditor group life insurance coverage.

Bank Mortgage Life Insurance

Personal Life Insurance

  • Coverage decreases with mortgage
  • Joint coverage pays only balance of mortgage
  • Premium is the same whether you owe $300,000 or $50,000
  • Bank is the beneficiary – remainder of mortgage paid upon death
  • Coverage and premium remain level all term
  • Joint coverage may pay double if both lives insured die together
  • You choose the beneficiary – they get to keep the difference of policy amount and mortgage balance or they may decide to keep paying the mortgage, use the money to buy rental property etc.
  • Usually lower difference in smoker vs. non-smoker rates
  • You might only be covered for the mortgage amount, lines of credit may not be included
  • Non-smokers pay much less than smokers
  • You can choose any coverage amount which may be more or less than your mortgage, based on budget and existing insurance
  • Policy owned by bank (creditor group insurance)
  • Few questions on application
  • Usually underwritten after claim
  • Rates not available preferred
  • You own the policy
  • Detailed medical questions on application
  • Underwritten before policy issue
  • Preferred and non-standard rate options are possible
  • If you change lenders or buy a new property, the full coverage including lines of credit, may not be portable
  • Not convertible to permanent life insurance
  • Policy is portable, not dependent on what home you own or any lender
  • You may continue with the insurance even after mortgage is paid off
  • Can be converted to permanent life insurance without medical

Bank Mortgage Life Insurance

  • Coverage decreases with mortgage
  • Joint coverage pays only balance of mortgage
  • Premium is the same whether you owe $300,000 or $50,000
  • Bank is the beneficiary – remainder of mortgage paid upon death
  • Usually lower difference in smoker vs. non-smoker rates
  • You might only be covered for the mortgage amount, lines of credit may not be included
  • Policy owned by bank (creditor group insurance)
  • Few questions on application
  • Usually underwritten after claim
  • Rates not available preferred
  • If you change lenders or buy a new property, the full coverage including lines of credit, may not be portable
  • Not convertible to permanent life insurance

Personal Life Insurance

  • Coverage and premium remain level all term
  • Joint coverage may pay double if both lives insured die together
  • You choose the beneficiary – they get to keep the difference of policy amount and mortgage balance or they may decide to keep paying the mortgage, use the money to buy rental property etc.
  • Non-smokers pay much less than smokers
  • You can choose any coverage amount which may be more or less than your mortgage, based on budget and existing insurance
  • You own the policy
  • Detailed medical questions on application
  • Underwritten before policy issue
  • Preferred and non-standard rate options are possible
  • Policy is portable, not dependent on what home you own or any lender
  • You may continue with the insurance even after mortgage is paid off
  • Can be converted to permanent life insurance without medical

Let BestPlan design a proper life Insurance strategy for your needs.

This could save you THOUSANDS in after tax dollars over the mortgage term or beyond