Life/Disabilty Insurance for a mortgage - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

stang · 03-26-2009, 05:56 AM

Is this worth getting? Or should I be getting a seperate Life insurance package.

I had life and Disabilty insurance no problem with my one mortgage, (from whoever they use) and now I switched banks and their insurance denied us disablity for some reason, and our monthly payment is still higher.

I am a total newb about this stuff, so any recomendations would be nice.

(and I dont live in Calgary... Dont know if that makes a difference)

Thanks

Sample00 · 03-26-2009, 06:02 AM

as a former CIBC employee, I would not recommend the bank's life and disability products.
go see an insurance specialist and purchase your insurance that way.
this way you control the policy and your estate can determine whether to pay off your mortgage or not.
secondly bank insurance is based on the declining balance of your mortgage.'
a personal insurance policy does not reduce as your balance on the mortgage reduces.

Deegee · 03-26-2009, 07:09 AM

In some cases the Financial Institution that you get your mortgage with offers both insurance that will pay a set dollar amount or the declining balance kind.

I will echo the comments to shop around, though.

GrrlGoalie33 · 03-26-2009, 07:13 AM

Usually the insurance you are being offered by the lender (house, car, other loan) does not require you to 'qualify' i.e. no physical.

If the time comes and you need to use it, they will find all sorts of ways to get out of paying the insurance claim.

You are better off going to an independent insurance agent who will provide you with the correct insurance to meet your needs. Chances are it will be a policy that covers more than just your mortgage should something happen.

Slava · 03-26-2009, 08:34 AM

I am an independent advisor if you want some information.

evilcougar · 03-26-2009, 08:37 AM

theres pro's and con's to a banks life/dis insurance policy. personally my institution does not offer disability. we do offer life tho. and it's pretty cheap. however, you do have to answer a health questionaire.
in a way it's a waste of money but in a way it's not.
the good thing about it is its less money out of your outside life insurance policy to pay off your mtg.
so, your beneficiary would get more money in the end b/c the outside life policy for your mtg would pay off your mtg, but it also depends on how much they are charging you per month for it.
definitely shop around and check out the requirements.

you want to also evaluate your current life situation. if you are single no spouse or kids, then just get an one policy thru one insurance agent to cover everything. but if you have a spouse or kids, i would heavily consider (again pay attention to requirements and cost) buying the life policy thru your mtg holder.

can't say much about disability b/c again my company doesn't offer it, however, i do have a few mtg's in my collection que right now that aren't working b/c they hurt themselves and are on WCB.

you just never know what can happen....thats all i'm sayin.

macker · 03-26-2009, 08:37 AM

Use https://www.winquote.net/ www.kanetix.ca to get some quotes. The first link will rank the companies offering coverage in Canada. Big difference is the premiums are guaranteed, you pick the beneficiary and it is not the lending inst. and the coverage isn't on a declining scale. Level premiums and level coverage which you can usually get for a lower premium vs creditor insurance as they blend the rates and include healthy/unhealthy/smoker/non-smoker rates into one.....For DI there are only a handful of strong providers in Canada : Canada Life/Great West Life as GWL owns Canada Life, RBC, Manulife and Sunlife. You may pay a bit more on the DI side but the coverage and wordings are superior to anything the banks can offer. There are other benefits that I haven't covered as this is on the fly....

macker · 03-26-2009, 08:45 AM

Quote:

Originally Posted by evilcougar

theres pro's and con's to a banks life/dis insurance policy. personally my institution does not offer disability. we do offer life tho. and it's pretty cheap. however, you do have to answer a health questionaire.
in a way it's a waste of money but in a way it's not.
the good thing about it is its less money out of your outside life insurance policy to pay off your mtg.
so, your beneficiary would get more money in the end b/c the outside life policy for your mtg would pay off your mtg, but it also depends on how much they are charging you per month for it.
definitely shop around and check out the requirements.

you want to also evaluate your current life situation. if you are single no spouse or kids, then just get an one policy thru one insurance agent to cover everything. but if you have a spouse or kids, i would heavily consider (again pay attention to requirements and cost) buying the life policy thru your mtg holder.

can't say much about disability b/c again my company doesn't offer it, however, i do have a few mtg's in my collection que right now that aren't working b/c they hurt themselves and are on WCB.

you just never know what can happen....thats all i'm sayin.

Read the book "Russian Roulette" and you will never look at DI coverage the same way again!!! Your health is your wealth and it is a living benefit that some would argue is more important vs life insurance and should not be ignored as the stats will tell you between ages 18 and 65, 1 in every 3 will have some sort of DI and the average length is 2.9 years so can you afford to take a 3 year vacation without pay! This is an area that you don't want to cheap out in and you need to build a financial wall around your family that nothing can get to....OP likely has DI with his work but it is still worth looking at a top up if the debt or needs warrant it...and the wordings and coverage are also often better with indiv.plans.

Slava · 03-26-2009, 08:48 AM

Well truthfully there are a lot of reasons to skip the creditors coverage, both on the Life and Disability side. Many of which have been covered here, but in my eyes the number one reason is that a lot of creditor coverage is underwritten at the time of claim.

This means that you buy a policy and pay the premium for however many years. You think that you are covered. When a claim happens (either you die, or you become disabled) the company goes through the underwriting process and decides on whether they will cover you. By this point, its too late....you have had the claim and paid for the coverage.

Any reputable advisor will never provide this type of coverage for their clients. In my opinion this is borderline unethical, and while its legal its abhorrent. If an insurer has no intention of covering me I want to know when I apply for coverage so that I can make other arrangements and not after paying premiums for peace of mind that doesn't really exist.

Antithesis · 03-26-2009, 09:44 AM

Let MoneyGuy (he's in Edmonton area) or Slava, who is down here, set you up with independent life insurance. Mortgage insurance is no good.

MoneyGuy · 03-26-2009, 09:49 AM

This MarketPlace video takes over 20 minutes but it’s very revealing. http://www.cbc.ca/marketplace/2008/0...lways/#comment

One of my favourite criticisms about bank insurance is the fact that usually your premiums are based on the original insurance amount and it never changes as your mortgage declines. That means that if your mortgage was $200,000, as the amount owing drops you’re paying the same premium as on $200K. When your mortgage is $100,000, you’re paying a premium based on $200,000 of debt.

Also, if you're young and healthy this group insurance is underwritten as a group, so you're underwritten the same as a 60-year-old fat guy who might have diabetes. I'm very critical of banks and their crap insurance is one of the big reasons.

Thanks for the plug, Antithesis. How the little one?

Shazam · 03-26-2009, 11:40 AM

I pay DI + Term LI.

There's no way I'm leaving my family hanging if something happens.

DESS · 03-26-2009, 12:22 PM

Quote:

Originally Posted by Shazam

I pay DI + Term LI.

There's no way I'm leaving my family hanging if something happens.

Yeah but do you go through a private insurer or do you go through your bank? I don't think anybody is arguing you shouldn't have insurance, but the consensus seems to be LI through your bank is not the best route.

Shazam · 03-26-2009, 12:26 PM

No, not through bank. It's not mortgage life insurance, the most useless product ever invented other than the submarine screen door.

DESS · 03-26-2009, 12:29 PM

Gotcha. Yeah, I have life insurance as well.

MoneyGuy · 03-26-2009, 12:34 PM

Quote:

Originally Posted by Shazam

No, not through bank. It's not mortgage life insurance, the most useless product ever invented other than the submarine screen door.

I disagree. I nominate reverse mortgages as the most useless product.

ken0042 · 03-26-2009, 12:46 PM

OK, I can't say I've looked that hard into it, but isn't a reverse mortgage just one of those things that might be right for some, but not everybody?

Like if I'm single, 70, and in poor health why not get some cash and live the last few years of my life full of hookers and blow instead of eating cold Kraft Dinner in the dark? Sure, if you have family to take care of (or leave the house to) it may not be the best idea.

Rathji · 03-26-2009, 01:01 PM

Quote:

Originally Posted by ken0042

OK, I can't say I've looked that hard into it, but isn't a reverse mortgage just one of those things that might be right for some, but not everybody?

Like if I'm single, 70, and in poor health why not get some cash and live the last few years of my life full of hookers and blow instead of eating cold Kraft Dinner in the dark? Sure, if you have family to take care of (or leave the house to) it may not be the best idea.

If you have family to take care of or leave the house to, then make them take care of you and take the house when you croak.

MoneyGuy · 03-26-2009, 01:02 PM

Quote:

Originally Posted by ken0042

OK, I can't say I've looked that hard into it, but isn't a reverse mortgage just one of those things that might be right for some, but not everybody?

Like if I'm single, 70, and in poor health why not get some cash and live the last few years of my life full of hookers and blow instead of eating cold Kraft Dinner in the dark? Sure, if you have family to take care of (or leave the house to) it may not be the best idea.

Congrats, you've succeeded in finding the one situation a reverse mortgage MAY* work reasonably well. But if you have anyone you love to leave behind, don't bother. If you hate your kids, a RM might be a good thing. However, there is a better option.

Titan · 03-26-2009, 01:14 PM

i'll let the pros give advice on the policies but I think it is a good idea to make sure you name your beneficiary. If you leave it as estate it can be claimed by debtors and relatives that may think they have a claim. If you name the beneficiary it goes straight to them and the estate has no claim on it.

I deal alot with Powers of Attorney and Disabled Adult trustees. If the person did not set up their affairs properly, the trustee has troubles getting their wife on as the beneficiary as a Power of Attorney does not have the authority. If you set it up on a previous account and something happens the wife can argue that is what you intended. Sounds obscure but is a very important point.