[Kristi Hyson]

Originally Posted by Slava

I'll partially agree here. Having protection for yourself in terms of life insurance, critical illness and disability is important. I wouldn't (for a number of very important reasons) suggest that buying insurance from the bank/mortgage issuer is anywhere near that efficacy though. It doesn't offer the same security and bluntly the party that receives the protection in those cases is the financial institution.

People should have coverage, but they should speak with a fully licensed advisor to get it.

Hi,

I agree mortgage holders require insurance, however, I disagree with the information posted "It doesn't offer the same security and bluntly the party that receives the protection in those cases is the financial institution."

Clarification, life insurance offered by financial institutions is not in the financial institutions best interest, the insurance is in the mortgage holder’s best interest. The only insurance requirement the financial institution is concerned about is fire insurance. The property in which the mortgage is registered is the security, if the home is not insured against loss of life, health crisis & disability the property can be foreclosed on in the event of a death or an accident.

Mortgage insurance offered by financial institutions cover the entire mortgage including the penalty. If you take a policy with a third party insurance company for the mortgage amount and do not include provisions for the penalty (in the event of an early payout) the policy will not cover the mortgage in full and will leave an outstanding balance. With the financial institutions policies the mortgage is paid in full inclusive of the penalty.

It is best to review all options and choose the insurance product that best fits and meets the needs of the borrower.