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Which Cover Is Better? Level Term Life Or Mortgage Protection Life?

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Which Cover Is Better? Level Term Life Or Mortgage Protection Life?

Postby Doane » Tue Sep 12, 2017 11:32 pm

Term Life (or term critical illness or disibility insurance) is better than Mortgage insurance (whether it's life, CI or DI). Without question.
If you googles search it there will be litterally hundreds if not thousands of sites that compare them and not a single one will pick Mortgage Life over Term Life.
The bank websites don't even try to justify their product in a direct comparison...they just stick to the positives of why insurance in general is good, not even noting the benefits of their product over others.

Here are a couple quick reasons why:

1. Post claim underwritting on Mortgage life.
They don't decide is you are eligible for the claim payout until after you die.
You can pay all your life and still get denied a claim.
Here is a link to a couple news videos that discuss this in more detail: http://www.cbc.ca/marketplace/2008/02/06... http://www.cbc.ca/marketplace/2007/02/cr...

Mortgage Life is a group plan that the bank owns.
If the bank wants to change or discontinue coverage, they can do it without notice or input from you.
Term life is your own individual plan.
Once it is set up and the terms are disclosed, ONLY you have the ability to make changes to it.

Mortgage Life has the beneficiary as the bank.
That's it.
They are just making sure they get paid.
What if the mortgage balance is very small and manageable by the family, but your kids college dreams are more expensive? Wouldn't you want to have your family in control of your money? Term life let's YOU name a beneficiary and that beneficiary can do whatever they want with the money...they might pay off some of the debts, they might pay off all of the debts, or they might not use the money to pay off any of the debts.
It's up to what they think is their best option.

If you change banks at the end of your term you start over again and have to reapply for Mortgage insurance.
With a Term Life policy, the policy isn't directly attached to your mortgage, so when you change banks you don't need to reapply.

The coverage amount.
The bank ONLY covers the mortgage.
What about the funeral? Kids education? Lost wages? Taxes? Legal fees? Charitable giving? A term policy can take care of ALL of these needs and all your different debts in one plan.

Those are kind of the top 5 reasons in my opinion that show Term beats out Mortgage insurance (or sometimes referred to as creditor insurance) EVERYTIME.
Here is a link to a website with a GREAT comparison of ALL the differences between each: http://asset-aid.com/bank_vs.html
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