Are you saving enough for retirement?

[GordonBlue]

Originally Posted by Slava

Mortgage insurance is generally a bad deal. I can explain the full reasons for this, but near the top of the list is the idea that you’re basically insuring the lender as opposed to you and your family. A close second though is that a significant amount of claims are declined by mortgage insurers due to the underwriting at the time of the claim. So in layman’s terms, someone dies and then they decide whether they would have insured them. I know that sounds insane, but that’s how it works.

It’s far better to have your own, stand-alone life insurance policy. The costs are similar in most cases, but the coverage is far stronger and actually goes where you prefer and can be used as your beneficiaries see fit.

thank you. my mortgage is up for renewal, and I before we go in, I want to be able to successfully argue with my wife as to why we shouldn't go with the insurance.

[FurnaceFace]

Regarding bank mortgage insurance, unless things have changed in recent years, note it will only cover you for the remaining amount of your mortgage and go directly to your bank.

If you originally needed 300k for insurance 10 years ago and now your mortgage is 150k, that's all you're covered for but you will remain at the 300k rate. If you had a term policy or term rider on your permanent policy, your insurance amount would remain constant and would go to your survivors instead of the bank directly.

EDIT: Slava and Nufy beat me to it.

[Shazam]

Originally Posted by GordonBlue

thank you. my mortgage is up for renewal, and I before we go in, I want to be able to successfully argue with my wife as to why we shouldn't go with the insurance.

Be very mindful when signing the forms, I guarantee they will stick in the mortgage insurance form.

[Fuzz]

You can cancel at any time, at least mine you could. I couldn't even do it at my renewal, I had to phone in and deal with a guy trying to convince me not to. Which made me even more certain it wasn't worth it.

[Bonded]

Yeah, for the same price as mortgage insurance me and my wife were able to get double the amount of coverage between us for the same price.


I think mortgage insurance would only make sense if you cannot get affordable life insurance

[MoneyGuy]

Originally Posted by GordonBlue

is it worth it to have mortgage insurance?
I'm thinking no as I keep hearing it's a rip off, and people should cancel it and just get life insurance which likely will cost less.

No, get real insurance. Google and watch In Denial on CBC Marketplace and your question will be answered.

[MoneyGuy]

Originally Posted by Johnny199r

My dad had mortgage insurance. He got cancer and died. The mortgage insurance saved my mother.

True insurance would have done the same.

[Johnny199r]

Originally Posted by MoneyGuy

True insurance would have done the same.

I don't disagree.

[bizaro86]

Originally Posted by Fuzz

You can cancel at any time, at least mine you could. I couldn't even do it at my renewal, I had to phone in and deal with a guy trying to convince me not to. Which made me even more certain it wasn't worth it.

Mortgage insurance is a flat out terrible deal. We had it when we initially got our mortgage. Then we did some research. We called Slava, and got ~twice as much coverage that won't decline. It was ~40% cheaper. Plus, we have the option to keep renewing (at higher rates) at the end of the term.

[curves2000]

I will echo what Slava and others have said regarding mortgage insurance purchased from a lender like a big 5 bank. Get proper approval and insurance such as life and disability insurance from a licences insurance advisor. I will try and summarize quickly the reasons behind it.

The Bank Act, the legislation that regulates a lot of the banking sector has some controversial aspects to it when it comes to insurance activities and products for banks. Simply put, banks are prohibited from selling bank owned insurance products to clients inside bank branches and other direct selling platforms.

This probably was or is still done as per the insurance lobby as they feel banks have/had a competitive advantage with their large branch footprint. If you think of the Big 5 banks all having approx 1000 branches across Canada in recent years vs some of the insurance offices which are much smaller.

The issue is that consumers still have insurance needs and the banks love the non interest revenue that comes with selling clients insurance needs such as travel, medical, life, disability, personal lending and mortgage insurance etc.

Almost all the insurance products sold to bank clients are underwritten by insurance companies such as Sun Life, Manulife, London Life etc and those companies pay a commission or a % of the premium bank to the bank.

Personal bankers aren't licenced insurance employees but are obligated to sell these products. If you take mortgage insurance, its sold as being the cats a** but in reality it only pays off the existing debt on the mortgage or makes the payments if you are ill and have coverage. Proper planning should entail getting coverage to pay for additional expenses.

The issue is how these policies are underwritten, a quick 2-3 questionnaire where you answer about a few health questions and then start paying premiums and think you have coverage. If you have to file a claim for whatever reason, then the insurance company will do a post claim underwriting process and dig a little deeper and if they find that you misrepresent your answers, your claim is denied and your premiums are refunded. A large portion of claims are paid but the way the questionnaires are asked, you literally need a Dr, a lawyer and an insurance agent to properly answer everything.

You can call the 1-800 number and speak to someone and then get approved for the coverage after giving more information, the issue is that most people don't know that or aren't instructed by the bank employee. The level of pressure to sell these products can be huge and just like other sh**y government policy, its the consumers who are paying the price with poor advice as a result of this battle between banks and insurance companies for your dollar.

[GGG]

Originally Posted by GordonBlue

thank you. my mortgage is up for renewal, and I before we go in, I want to be able to successfully argue with my wife as to why we shouldn't go with the insurance.

Get quotes for both options. In my case I got underwritten at time of purchase mortgage insurance (blood tests were done and I read the fine print) at a lower rate than a 10 yr term life policy for the midpoint amount between the amount owing now and the amount owing in 10 years.

Assuming that you don’t pay down additional principal to your mortgage and check every few years it could be cheaper to have mortgage insurance early in a mortgage.

[bizaro86]

Originally Posted by GGG

Get quotes for both options. In my case I got underwritten at time of purchase mortgage insurance (blood tests were done and I read the fine print) at a lower rate than a 10 yr term life policy for the midpoint amount between the amount owing now and the amount owing in 10 years.

Assuming that you don’t pay down additional principal to your mortgage and check every few years it could be cheaper to have mortgage insurance early in a mortgage.

Interesting. That's super unusual. I've been offered mortgage insurance from a number of different combinations of lenders/insurers over the years, and it's never been even close to the cost of term.

Would you mind sharing the lender/insurer?

[GordonBlue]

thanks for all the good opinions and advice guys. it's one of those things that I needed some decent advice or to be pointed in the right direction, and I'm wary of blindly trusting google searches.

I just don't want to blindly be pissing money away.

[bizaro86]

Originally Posted by GordonBlue

thanks for all the good opinions and advice guys. it's one of those things that I needed some decent advice or to be pointed in the right direction, and I'm wary of blindly trusting google searches.

I just don't want to blindly be pissing money away.

I would try to get a term quote in advance. That way you have the facts and can easily see whether it's a good deal or not.

[Shazam]

Originally Posted by GGG

Get quotes for both options. In my case I got underwritten at time of purchase mortgage insurance (blood tests were done and I read the fine print) at a lower rate than a 10 yr term life policy for the midpoint amount between the amount owing now and the amount owing in 10 years.

Assuming that you don’t pay down additional principal to your mortgage and check every few years it could be cheaper to have mortgage insurance early in a mortgage.

A blood test for mortgage insurance? Who was this through?

[Wormius]

Originally Posted by Shazam

A blood test for mortgage insurance? Who was this through?

Sounds sketchy. Probably wake up one day with a kidney missing and your mortgage insurance cancelled.

[stone hands]

I think I am. dual income, no kids right now, no debt outside of a mortgage, putting +-50% of income away. Dont really have any expensive hobbies outside of PC gaming and cycling and I have been trying to get more and more frugal the older I get. I plan on retiring pretty early(in my 40s hopefully) and have no aspirations for a snowbird second home or anything like that. Pretty much just waiting for passive income to be able to replace our working incomes and just chill at home and ride bikes, play guitar and video games all day instead of working. I found mrmoneymoustache's blog a few years ago and it's had an incredibly transformative effect on my finances, and I've noticed zero impact on my quality of life. WHen we have kids the plan might change, but right now things are looking pretty good

[bizaro86]

Originally Posted by Shazam

A blood test for mortgage insurance? Who was this through?

I think it depends on the amounts involved and how you answer the health questions. I've had one mortgage insurance and two sets of life insurance (increased $ amount pre-kids). Each time I had to have a nurse come and take blood.

But I have a parent who had Leukemia (blood cancer) at a young age. I've always just assumed they wanted to make sure I didn't actively have cancer before writing the policy. I never heard back anything from anyone other than the policy was approved...

[GGG]

Originally Posted by bizaro86

Interesting. That's super unusual. I've been offered mortgage insurance from a number of different combinations of lenders/insurers over the years, and it's never been even close to the cost of term.

Would you mind sharing the lender/insurer?

It was 10 years ago through whoever Scotiabank was using at the time. I had done the math on the options and then in doing research found all of the comments on why it wasn’t a good deal so rechecked everything and confirmed the underwriting. It was a better deal for about 5 years then I switched over to a 10 year term policy.

The only caveat would be if my wife and I died together in an accident we wouldn’t have been paid out twice. Essentially the discount from both my wife and I both being insured on the mortgage made it lower cost. What I don’t think I considered at the time was what was the likelihood of both of us dying together vs dying apart.

The other thing is that the administration portion of insurance is quite high on a policy so if you have existing term life insurance needs and are just increasing by the value of your mortgage it’s going to be cheaper. In my case I had enough low cost insurance through my work at the time that I didn’t need an additional term policy so it was a 10 yr term life product for my wife and I vs mortgage insurance. If you need a term life policy anyway then increasing the amount to account for paying a mortgage off likely is cheaper. Also I can hear the insurance professionals cringing on relying on work place insurance because it’s tied to your job rather than just to you making payments.

[bizaro86]

Originally Posted by GGG

It was 10 years ago through whoever Scotiabank was using at the time. I had done the math on the options and then in doing research found all of the comments on why it wasn’t a good deal so rechecked everything and confirmed the underwriting. It was a better deal for about 5 years then I switched over to a 10 year term policy.

The only caveat would be if my wife and I died together in an accident we wouldn’t have been paid out twice. Essentially the discount from both my wife and I both being insured on the mortgage made it lower cost. What I don’t think I considered at the time was what was the likelihood of both of us dying together vs dying apart.

The other thing is that the administration portion of insurance is quite high on a policy so if you have existing term life insurance needs and are just increasing by the value of your mortgage it’s going to be cheaper. In my case I had enough low cost insurance through my work at the time that I didn’t need an additional term policy so it was a 10 yr term life product for my wife and I vs mortgage insurance. If you need a term life policy anyway then increasing the amount to account for paying a mortgage off likely is cheaper. Also I can hear the insurance professionals cringing on relying on work place insurance because it’s tied to your job rather than just to you making payments.

Interesting - thanks for sharing. I actually tried to buy first-to-die insurance once. When were first married, neither my wife nor I could have covered our mortgage, but we had no kids. I figured why pay extra for a second payout, if one of us died the other one probably needed the money, but if we both died I didn't see a big reason to make sure our relatives ended up with a huge windfall. But the difference in cost between two regular term policies and a joint first-to-die was only a few percent, so I just bought the term policies.