Mark Tiernan, How Good a Deal Is Your Banks Mortgage Insurance Plan?

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Mark Tiernan, How Good a Deal Is Your Banks Mortgage Insurance Plan?



When you go to the bank to get a mortgage, you'll inevitably be asked to
take out mortgage insurance. The idea behind mortgage insurance is simply
that if something happens to you or your spouse then your loan will be paid
off which is good news for your family and the bank. Most financial
institutions act like they are doing you a favor by offering you mortgage
insurance through their own group plan, but are they?

The truth is that you could probably get a much better deal and at least an
equal amount of protection by shopping around for your own insurance policy.

Essentially, mortgage insurance is no different than term-life insurance.
With both, your policy only lasts for a specified period of time and pays
its benefits if something happens to you or your spouse. The real difference
comes down to how much control you'll have over your policy and how much
you'll pay for it.

If you choose to use the mortgage insurance offered by the bank, you will
not be able to customize a policy to fit your needs and you'll be lumped
together with other borrowers under a group plan. Because of this, you will
only have limited control over your policy. For example, through a third
party provider, you would be able to choose your own beneficiary, decide how
to spend the proceeds if necessary, and cancel the policy at any time. You
would not have these options with a lending institution.

Additionally, the bank maintains the right to not renew your policy and to
cancel the policy when you sell the house. If you find your own insurance
provider, you can make those decisions yourself.

The other big difference is cost. A third party insurance policy's premiums
will not go up, so you would pay the same premium today that you'd pay ten
years from now. You won't get that same guarantee from a bank which can and
probably will increase your premiums during the life of the policy. In most
cases, you'll probably pay more through a bank anyway. In fact, you could
pay as much as 40% more than you would if you shopped around and found your
own insurance provider. Not to mention that the policy you take out through
your bank will gradually decrease in value while a plan you select from an
outside source will be worth the same amount during the entire policy
period.

Of course, many people don't mind paying more for their mortgage insurance
because it's more convenient than dealing with insurance agents. The truth
is that you can easily find a policy that fits your needs and provides
affordable premiums via the Internet. An organization, such as the Hughes
Trustco Group, can even generate quotes for you from multiple insurance
providers so you'll know that you're receiving the best deal possible on the
policy you want.

The bottom line is that mortgage insurance is important and should be part
of your home buying or refinancing preparations, but that does not mean you
need to pay more or let the bank make important decisions for you. Instead,
you should find your own personal plan from a third party provider which
will let you stay in control of your policy and will save you money in the
long run.

Ivon T. Hughes, The Hughes Trustco Group Ltd. Canadian Insurance Broker -
Get a FREE Quote TODAY! Tel: (514)842-9001 Email: info at trustco.ca Web: