Quote:
Originally Posted by Deegee
Some detached condos require the owner to arrange their own fire insurance. It really depends on the type of "condo" you are looking at.
I know our creditor insurance underwrites at time of application and although it is offered on a declining basis we have had some folks approved who have had health issues with riders on it not covering them for that particular health issue at a higher then standard rate.
Our creditor insurance (specifically the disability which is a tax free benefit) also is not rated based on occupation which can be a benefit for the applicant, especially if they are a truck driver or work oil and gas up north.
To say it is garbage is likely an over stated as it does have its place depending on the circumstance, however I would suggest it is most important that a person ensures it is underwritten at time of application rather then claim and address if it feels a need or not.
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There are other factors as well though. Is the declining balance really in the insureds best interest? Is the insured being able to select a beneficiary a critical factor?
On that point I would say it is. Maybe some people would want to remain in the same home if their spouse died. I know I couldn't handle that. So while it would be great that the house is paid off in that instance, it might not be what you really want. One of the great benefits of insurance is that it provides instant liquidity, but in that case that liquidity just got tied up in the house which is nowhere near as liquid. Nevermind the potential tax ramifications if that property is not a principal residence!
As for the disability coverage, that is a whole other concern. There are a lot of factors with disability coverage (ie. how long the coverage goes for, the benefit amount, when the benefit starts, etc.) and a lot of the lenders offerings here are simply not as strong as a standalone policy. I would hate for my clients to be on a claim for 2 years and find out at that point that the policy doesn't provide a benefit anymore because the definition has now changed. As for it being after-tax, any disability policy paid for by an individual with after-tax dollars is. There is nothing new there. Its great that you don't rate for occupation class, but I would hazard a guess that there are coverage limitations and financial limitations there that are not in a standalone policy. No way the insurer blindly takes that risk, keeps everything equal and doesn't make up for this somewhere. One of the most basic principles of insurance is that the premium is commensurate with the risk, so they simply must.
I agree that there are situations and coverage offered by some lenders now that is better than it was, say a decade ago. Talking to a licensed insurance broker/advisor though is still the best IMO.
