Personal Life Insurance protects you, your home and your beneficiaries. Mortgage Insurance solely protects the lender. They appear similar, but in fact are quite different. See below to understand more about the differences.
Mortgage Insurance with lender Personal Life Insurance Bank owns the policy cannot be switched to another lender. You own the policy and can switch to another lender without jeopardizing your insurance coverage.
If you die, the lender pays off the mortgage your beneficiary has no choice about how to use the funds. Your beneficiary can choose to do whatever they wish with the funds. No flexibility, you have to use the lenders product. You can choose insurance that best suits your needs and budget from a variety of Canadian Insurance companies If the property is sold the policy is cancelled Your insurance protection stays in place if the property is sold. Usually covers the exact amount of the mortgage and coverage decreases as the mortgage is paid down, however, the payments remain the same. You end up with no coverage once the mortgage is paid down. Coverage does not decrease, so you always have the funds available should you die when they are needed most. Lenders insurance is non convertible Term Insurance with no cash values or ability to move to permanent insurance. You can convert to permanent insurance and create tax sheltered savings towards your retirement. Dollar for Dollar – generally more expensive Dollar for Dollar generally cheaper than mortgage insurance.