Mortgage & Creditor Insurance

What Does Your Mortgage Mean To You?

What are you protecting when you insure your mortgage?

personal-life-insurance-vs-banks-mortgage-life-insuranceWhen a family or individual borrows money from the bank to finance a home, be it a traditional mortgage or home line of credit, they are going into significant debt for their home ownership. It would be nice if we could all save up the $300,000 to $500,000 to buy a home in Canada, but that would take too long. We Canadians want it all right now – the big house, nice cars, all our electronic toys, etc. This has led to a culture of debt – we borrow to have the things we want today.

There is Good Debt and Bad Debt

When borrowing money, we’ve all heard the term good debt and bad debt. This basically means that the purpose of our borrowing will either create value or create additional cost. For instance, if you borrow money to buy a car, and that car allows you to accept a higher paying job further away from home because you can now commute to work, this is good debt. If you borrow money to buy a very expensive sports car or big truck which has no practical purpose (just for fun or show) this is bad debt, because the interest on the loan has no real purpose. It just adds cost.

Generally home buying and mortgages are good debt. So long as you can afford the mortgage payments now and in the long-term, a home not only retains its value, it increases its value over time. The interest you are paying on the mortgage can be very costly, but you are also paying off the principle in the home, and building value. Considering that you would need a place to live anyway, you have three choices: 1) Rent; 2) Buy with a Mortgage; 3) Buy with all Cash Down. Since most people can’t afford to buy a house for cash, they really have only two choices. Renting is a pure cost and brings no long-term value. It only provides the home and shelter you need. A mortgage gives you the home and shelter PLUS builds value, in exchange for paying an interest rate on the money loaned to buy the house.

Are you Insuring your Mortgage?

When taking out a mortgage with a bank or other lender, they will invariably offer you a mortgage life insurance policy. Firstly, insuring the very large debt of a mortgage is a good idea, and everyone should have their debts covered in case a bread-winner or caregiver in the family dies prematurely. That being said, there is good life insurance and bad life insurance! The bank’s mortgage life insurance policy falls into the Bad Life Insurance category. And here’s why:

  • The bank owns the policy.
  • The bank controls the policy and will cancel coverage if you leave them for another lender.
  • The bank is the 100% beneficiary of the policy – your family gets $0 cash.
  • It’s the bank’s risk that needs to be insured – they lent you the money.
  • The policy is a declining benefit with a constant premium – as you pay off your mortgage you have less and less life insurance but your payments remain the same.
  • You’re paying the premium for the bank’s life insurance plan!

There is a far better option to having the bank’s mortgage life insurance policy – personal life insurance. Owning a personal life insurance policy is far better for the following reasons:

  • The cost of term life insurance is usually cheaper than the bank’s premium rates.
  • You can cover off more than just your mortgage – you can protect your family’s lifestyle too.
  • You can lock in premiums for a long time, like 20 or 30 years or even for life.
  • The life insurance benefit does not decrease as you pay off your mortgage.
  • Your family receives 100% of the death benefit as a tax free cash payout, which gives them options.
  • You can take your personal life insurance with you where-ever you go, even if you leave Canada.
  • You can choose to have a policy that is similar to buying a home, with a cash value and eventual ownership of the full life insurance benefit.

Are you insuring a debt or protecting your family’s lifestyle?

The question to me is what are you protecting? If you’re only focused on a debt, and making sure the debt is paid off, then I guess you can stick with the bank’s mortgage life insurance policy. It might be a little more expensive than personal life insurance, but it is convenient to buy. But, if your home represents more than just a debt; if it represents your family’s life, a place of love, a place to build a future and fulfill your dreams, then you are protecting far more than the bank’s debt. You should be focused on protecting the future hopes, dreams and lifestyle that your family has, and that requires proper life insurance planning with a qualified and licensed life insurance professional.

If you would like to discuss your family’s life insurance needs, and compare personal life insurance to the bank’s mortgage life insurance policy, please contact us today. We would be happy to provide you with a free, no obligation quote and financial needs assessment to make sure your family is properly insured.

December 18, 2014

Mortgage! Does the Word Mean Debt or Lifestyle to You?

What Does Your Mortgage Mean To You?

What are you protecting when you insure your mortgage?

personal-life-insurance-vs-banks-mortgage-life-insuranceWhen a family or individual borrows money from the bank to finance a home, be it a traditional mortgage or home line of credit, they are going into significant debt for their home ownership. It would be nice if we could all save up the $300,000 to $500,000 to buy a home in Canada, but that would take too long. We Canadians want it all right now – the big house, nice cars, all our electronic toys, etc. This has led to a culture of debt – we borrow to have the things we want today.

There is Good Debt and Bad Debt

When borrowing money, we’ve all heard the term good debt and bad debt. This basically means that the purpose of our borrowing will either create value or create additional cost. For instance, if you borrow money to buy a car, and that car allows you to accept a higher paying job further away from home because you can now commute to work, this is good debt. If you borrow money to buy a very expensive sports car or big truck which has no practical purpose (just for fun or show) this is bad debt, because the interest on the loan has no real purpose. It just adds cost.

Generally home buying and mortgages are good debt. So long as you can afford the mortgage payments now and in the long-term, a home not only retains its value, it increases its value over time. The interest you are paying on the mortgage can be very costly, but you are also paying off the principle in the home, and building value. Considering that you would need a place to live anyway, you have three choices: 1) Rent; 2) Buy with a Mortgage; 3) Buy with all Cash Down. Since most people can’t afford to buy a house for cash, they really have only two choices. Renting is a pure cost and brings no long-term value. It only provides the home and shelter you need. A mortgage gives you the home and shelter PLUS builds value, in exchange for paying an interest rate on the money loaned to buy the house.

Are you Insuring your Mortgage?

When taking out a mortgage with a bank or other lender, they will invariably offer you a mortgage life insurance policy. Firstly, insuring the very large debt of a mortgage is a good idea, and everyone should have their debts covered in case a bread-winner or caregiver in the family dies prematurely. That being said, there is good life insurance and bad life insurance! The bank’s mortgage life insurance policy falls into the Bad Life Insurance category. And here’s why:

  • The bank owns the policy.
  • The bank controls the policy and will cancel coverage if you leave them for another lender.
  • The bank is the 100% beneficiary of the policy – your family gets $0 cash.
  • It’s the bank’s risk that needs to be insured – they lent you the money.
  • The policy is a declining benefit with a constant premium – as you pay off your mortgage you have less and less life insurance but your payments remain the same.
  • You’re paying the premium for the bank’s life insurance plan!

There is a far better option to having the bank’s mortgage life insurance policy – personal life insurance. Owning a personal life insurance policy is far better for the following reasons:

  • The cost of term life insurance is usually cheaper than the bank’s premium rates.
  • You can cover off more than just your mortgage – you can protect your family’s lifestyle too.
  • You can lock in premiums for a long time, like 20 or 30 years or even for life.
  • The life insurance benefit does not decrease as you pay off your mortgage.
  • Your family receives 100% of the death benefit as a tax free cash payout, which gives them options.
  • You can take your personal life insurance with you where-ever you go, even if you leave Canada.
  • You can choose to have a policy that is similar to buying a home, with a cash value and eventual ownership of the full life insurance benefit.

Are you insuring a debt or protecting your family’s lifestyle?

The question to me is what are you protecting? If you’re only focused on a debt, and making sure the debt is paid off, then I guess you can stick with the bank’s mortgage life insurance policy. It might be a little more expensive than personal life insurance, but it is convenient to buy. But, if your home represents more than just a debt; if it represents your family’s life, a place of love, a place to build a future …

December 11, 2014

Did You Wake Up Excited To Buy Life Insurance Today?

I’m Excited to Sell Insurance. Are You Excited to Buy It?

Life Insurance: Probably not the most exciting purchase you’ll ever make

ExcitedI don’t think I’ve ever met anyone who rolled out of bed saying, “This is a wonderful day – the day I buy Life Insurance!” I know that your insurance broker (counting myself among the group of life insurance brokers) is probably a lot more excited about selling you a policy than you are about buying one. And not just because of the commissions he/she will earn on the sale. Your broker understands how proper financial risk protection can benefit a family, how permanent life insurance can offer “investors” a rich and tax sheltered cash value, and how a person’s and family’s future can go on, no matter what life throws at them. We brokers have internal rewards and motivation to sell life insurance policies – not just commissions.

Does buying life insurance make you feel good?

When you purchase life insurance it should make you feel safe, secure and confident you have protected the one’s you love. That should make you feel good. Also, setting aside financial worries, like worrying about what would happen to your family if you died, is also a relief. Once your life insurance is in place you can have peace of mind and those worries are resolved.

Still, getting life insurance isn’t an exciting purchase. It’s not like shopping for a new sports car, or booking that exotic vacation you’ve always dreamed of. Those things are exciting purchases – and they can bring real joy to your life. Unfortunately, life insurance just feels like another bill you’re paying for each month. Something that could be avoided if you turned a blind eye to the possible risks to your life and the financial reality your family would face without your support or income. You can choose to be without life insurance. Sure! I’m not saying it’s a wise thing to do – but you can go without it.

When your family claims on your life insurance policy, that bill suddenly become the wisest investment you ever made!

Being financially responsible has its own rewards

While the process of buying life insurance is not the most fun, the rewards of having a policy that protects your family are great. You know that the tax free money paid from your life insurance policy will be a HUGE relief to your spouse and kids if anything were to happen to you. You’ve set up a plan that will look after their daily needs for years to come, when you are no longer there to provide for them. Making sure the mortgage is paid off, bills are paid, food is on the table, money is set aside for emergency expenses, that children can go to college or university, and your spouse won’t have to sell the house to make ends meet is why we buy life insurance. It’s a good feeling! It’s your way of saying, “I love you and I will protect you.” even beyond the grave.

Now, let’s be prepared. Buying life insurance is actually a slow and sometimes annoying process. Here are the steps to go through before you have a policy:

  • Meet with an insurance advisor/broker and discuss the “what ifs” around your death and mortality
  • Have a paramedical exam – with needles, urine specimens, height and weight measurements, etc.
  • Wait about 6 weeks for the underwriter to make a final decision
  • Meet your insurance advisor again to accept your life insurance policy

Not fast, and not what most people would call A Good Time, but necessary. At Life Guard Insurance our advisors help take the stress out of this process. We can discover exactly how much life insurance you should have, find the most competitive premiums in Canada for you, keep you informed all throughout the underwriting process, and finally be your trusted insurance advisor for years to come.

Contact us today for a free, no obligation quote and/or financial needs analysis to see how much life insurance you need. We would love to help you and become your trusted insurance advisor.…