Posted on: 23-06-06 21:16:21
Hello everyone
Will someone on this forum be kind enough to offer me advise? I have recently purchased a condominium. I have obtained a good mortgage interest rate from my bank and now my banking officer is also offering me the bank's life insurance and critical illness insurance on my mortgage. She has said that my premiums will always stay the same regardless of my age and the only condition is that I have to stick to that bank when I renew my mortgage. I have been on various websites and they all suggest that I go in for an independent term life insurance rather than the bank's life insurance on the mortgage. This has left me very confused. What do you guys think - any experience on this topic? Shall really appreciate any comments.
Many thanks.
Quote:
Originally posted by shahjajan
Hello everyone
Will someone on this forum be kind enough to offer me advise? I have recently purchased a condominium. I have obtained a good mortgage interest rate from my bank and now my banking officer is also offering me the bank's life insurance and critical illness insurance on my mortgage. She has said that my premiums will always stay the same regardless of my age and the only condition is that I have to stick to that bank when I renew my mortgage. I have been on various websites and they all suggest that I go in for an independent term life insurance rather than the bank's life insurance on the mortgage. This has left me very confused. What do you guys think - any experience on this topic? Shall really appreciate any comments.
Many thanks.
Go for independent insurance, that's what I did in the last 2 deals. If I'm not mistaken, the mortgage insurance will only cover the balance of your mortgage, where as the independent one will cover you to the amount of the policy. Pay the balance of your mortgage and keep the rest for yourself (well that's for the family to do, in the eventuality of.....)
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SS
Reiki Grand Master
Quote:
Originally posted by shahjajan
Hello everyone
Will someone on this forum be kind enough to offer me advise? I have recently purchased a condominium. I have obtained a good mortgage interest rate from my bank and now my banking officer is also offering me the bank's life insurance and critical illness insurance on my mortgage. She has said that my premiums will always stay the same regardless of my age and the only condition is that I have to stick to that bank when I renew my mortgage. I have been on various websites and they all suggest that I go in for an independent term life insurance rather than the bank's life insurance on the mortgage. This has left me very confused. What do you guys think - any experience on this topic? Shall really appreciate any comments.
Many thanks.
Do not fall in the trap of the bank for mortgage insurance and look for your own interests. Banks have there vested interests in selling you the so called mortgage protection insurance as by doing this they are protecting their own interest and are not really very much concerned about your interest as the bank would become a beneficiary and in case of any untoward incident the bank gets to keep the money and your beneficiary keep the house only. But apart from the house your beneficiaries would require food on the table and still have to cope with day to day living expenses.
If you have your own personal insurance, then your beneficiaries would get all the money and they decide what to do with the money; whether to pay down the mortgage or use the funds for other needs and expenses. Moreover, it also gives you the flexibility to go to any other bank for the mortgage at the time of renewal and you are not at the mercy of your bank as their mortgage protection insurance is not transferable.
Even though we place mortgages for our clients with banks, we always advise and get them their own personal insurance as per their needs and requirements because that's in their best interest and not what the bank would like to take them.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Thank you so so much Mr. Sudesingh and Mr. Pramod. Your invaluable advise has really saved me from being entrapped by the sweet talking banker. Unfortunately, I already gave my consent to the bank's mortgage protection insurance on the phone when the banking officer told me that she has my best interests in her mind and I was stupid enough to believe her. Since my closing date is still a month away, I will phone her again and cancel my insurance, will that be possible, I hope she doesn't put any barriers for me now like insurance cancellation fee or something - I have not signed any documents yet and this consent was done on the phone. Another lesson learnt in Canada !
Thanks again for your time.
Quote:
Originally posted by shahjajan
Thank you so so much Mr. Sudesingh and Mr. Pramod. Your invaluable advise has really saved me from being entrapped by the sweet talking banker. Unfortunately, I already gave my consent to the bank's mortgage protection insurance on the phone when the banking officer told me that she has my best interests in her mind and I was stupid enough to believe her. Since my closing date is still a month away, I will phone her again and cancel my insurance, will that be possible, I hope she doesn't put any barriers for me now like insurance cancellation fee or something - I have not signed any documents yet and this consent was done on the phone. Another lesson learnt in Canada !
Thanks again for your time.
Nothing to worry.
You can cancel any time even if you have signed any documents. Even, you can decide not to take mortgage with the bank after signing all the papers and bank sending instructions to the lawyer.
However, make sure to have something in place urgently as once you decide to buy the house, it becomes a part of your liability and it should be protected as you would have to honour the commitment of buying the house. We have had cases where the purchaser died before the closing and his spouse had to honour the agreement of buying the house even though she could not afford it as the main income earner was gone.
So do yourself a favour and buy the insurance even before the closing of the house and it does not have to be a term insurance of 20 years or so but should be a product which should meet your immediate and future goals. If you need help or have any more questions you can PM me.
Good Luck.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Right said Pramod ji about the mortgage insurance. I normally walk my buyers through this every time they buy a home. You may like to read the same:
http://realestate-ontario.com/homeinsurance.htm
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Amit Kalia, Broker, REALTOR®
RE/MAX Real Estate Centre., Brokerage
independently owned & operated
100 City Centre Dr, Unit 1-702
Mississauga, ON L5B 2C9
Phone No.: 905-339-5111
Website: https://www.realestate-ontario.com/
Condo Blog: https://condopundit.com/blog/
Pramod's advice is right on target.
Another good thing about taking your own independent insurance is that in case you switch mortgage providers i.e go from RBC to TD, for instance , the insurance is portable. If you have it with RBC bank and you switch to TD later, the insurance premium will be higher as you have aged.
With an independent insurer, it remains the same.
An independent insurer will also give you a combination term with permanent insurance, which is what I have. Plenty of cash value in the policy as well right now.
Don't mean to confuse you. Just go with an independent insurer, but don't fall into his/her trap either, as they also look out for their interests rather than the client's, though not all are like that.
I first went for a term insurance plan which was renewable and convertible as it was cheaper, as when you buy your first home there might be plenty of post expenses involved , like doing up the bathroom, painting to your liking, etc. Later on I changed to a permanent plan. It all depends upon your personal situation, whether you have money or not. I know plenty of people who have come from Dubai, Lagos and other places with money and buy permanent insurance right off the bat. Please check it out with 2-3 inurance agents.
Please do not think my track as the only track to follow.
