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Mortgage Insurance vs. Life Insurance – What am I Actually Covered For?

If you have ever purchased a home or applied for a loan, you may be familiar with Mortgage Insurance. This is the insurance the bank is obligated to encourage you to take in the event you die or become disabled. It is intended to protect your loved ones from being stuck with the mortgage in the event life takes a wrong turn ie. death.   Sounds like a no brainer right? Wrong! There are MANY pitfalls with Mortgage Insurance that put the bank’s best interest ahead of yours for a price that’s not worth it.

Before you say yes to Mortgage Insurance, consider a solution designed to PROTECT YOU, YOUR HOME, & YOUR LOVED ONES – not your lender.  This solution is Life Insurance.

Here are the FACTS that outline Mortgage Insurance vs. Life Insurance:

  1. With Mortgage Insurance, as you pay down your mortgage your coverage is reduced BUT the Mortgage Insurance Cost remains the same. With personally owned Life Insurance your coverage and cost are level throughout the term of the contract.
  2. With Mortgage Insurance the beneficiary is the bank ie. If you die, the bank uses the proceeds to pay off the mortgage. With Life Insurance YOU determine the beneficiary. This allows someone you determine to hold the cards and determine how best to pay-off the mortgage. For example they could choose to pay-off the outstanding mortgage with the Life Insurance proceeds and “pocket” the excess or to invest the proceeds and pay-off the mortgage with the interest generated.  The long and short of it is, your loved ones are the beneficiary and NOT the bank.
  3. With Mortgage Insurance, underwriting is often done at time of claim. This means you really don’t know if you are covered until you make a claim. Life Insurance underwrites your policy before you are approved. This ensures an iron clad contract between you and Life Insurance carrier, removing uncertainty at the time of death.
  4. The term of mortgage insurance is the length of the mortgage. With personal insurance you determine the length of the term.
  5. With Mortgage Insurance you do not own the policy, the lender does. That means they can make changes to the overall coverage without your consent.

The bottom-line is that for comparable rates (often less expensive rates) Life Insurance offers you and your beneficiary(s) more options and flexibility.

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Mike Erickson - Financial Advisor

Mike, who joined Connect Wealth in 2013, has a natural ability to connect with clients on both professional and personal levels. He entered the financial planning industry to give clients the confidence they need for their financial futures. Mike oversees the Group Retirement Plan Division, working with companies of all sizes and assisting clients in both saving for retirement and managing decumulation. A graduate of Trinity Western University’s School of Business, Mike holds multiple designations including LLQP and QAFP®. Outside of work, he enjoys coaching his sons’ baseball teams, spending family days at the beach, and volunteering in his community. Mike resides in Abbotsford, BC, with his wife Amy and their two boys.

Connect Wealth is an independent financial planning firm that offers holistic advice to clients based on their current goals and future aspirations. We use well-established workflows and cutting-edge technology to maximize planning efficiencies while simplifying the process for clients. Learn how you can maximize your financial opportunities at www.connectwealth.com

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Michelle, an Administrative Assistant focusing on insurance products and services, aims to provide high-level customer support and build strong client relationships. She holds a Bachelor of Business Administration from Simon Fraser University and has been working in the financial services industry since 1993. Outside of work, Michelle enjoys spending time with her family, walking her dog, baking, reading, and enjoying nature.

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Having been in the financial planning industry since 1990, Joey specializes in Risk Management and Estate Planning. He holds a Life and Segregated Funds License and has extensive field experience. Joey joined Connect Wealth in 2019 to work with his daughter Cassandra, creating the ultimate father/daughter team. Born in Fiji and relocated to Canada at 12, Joey is married to his high school sweetheart, Rita. They have three children and a grandson, Trysten. In his spare time, Joey enjoys golfing, fishing, and spending time with his grandson. Joey is passionate about providing clients with the best financial advice.

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Mike, who joined Connect Wealth in 2013, has a natural ability to connect with clients on both professional and personal levels. He entered the financial planning industry to give clients the confidence they need for their financial futures. Mike oversees the Group Retirement Plan Division, working with companies of all sizes and assisting clients in both saving for retirement and managing decumulation. A graduate of Trinity Western University’s School of Business, Mike holds multiple designations including LLQP and QAFP®. Outside of work, he enjoys coaching his sons’ baseball teams, spending family days at the beach, and volunteering in his community. Mike resides in Abbotsford, BC, with his wife Amy and their two boys.

Vince Olfert

MBA, CIM, CFP® – Certified Financial Planner®

Vince specializes in helping business owners and their employees build and protect their wealth. With extensive experience, he understands the financial and emotional challenges of managing wealth. Vince has been highlighted in Advisor’s Edge magazine for his work with pensions and group retirement services. He continually strives to make complex financial concepts easy to understand for clients. In his spare time, Vince enjoys spending time with his family, coaching community sports, and volunteering with local youth programs.