August 03 2023
When you take out a mortgage, it’s important to consider insurance. One of the most common types of protection people get is creditor insurance. It’s a policy that protects the mortgage lender if the borrower (or homeowner) passes away. When you think about it, this has less to do with protecting you, and more to do with protecting your lender.
Rethinking mortgage protection could be an important financial decision for you. Why? Because the reason you buy insurance is to protect your family and loved ones, not the banks.
Mortgage insurance primarily benefits the lender. It covers only the outstanding balance on your mortgage, but your premiums (the amount you pay every month) stay the same, even as the policy value decreases over time. What does that mean? It means that you pay the same amount every month, but the value of the policy decreases as you pay your mortgage off.
Life insurance from Sun Life, on the other hand, can cover your mortgage and so much more. The face value of your policy stays the same over time, meaning that you and your loved ones are covered. If you wish, through Sun Life, you can also get a Critical Illness plan designed to cover you if you get seriously ill. This means that your loved ones’ financial needs are taken care of if anything were to happen to you, and you can have more flexible coverage options that you can change over time.
So how do they compare?
|Product||Life Insurance & Critical Illness Insurance||Creditor Insurance|
|Who’s the Beneficiary?||You choose||The bank or your lender|
Term Life: Your loved ones can use the benefit to cover what they need
Critical Illness: You can use the benefit to cover what you need
|The outstanding balance on your mortgage at time of claim is paid to your lender|
|When is it underwritten?||At time of application||At time of claim|
|When does it renew?||Once you’re approved you don’t have to renew unless you decide to change the coverage or at the end of the term||When you sell your property, renew or move your mortgage to another lender|
Does your current mortgage insurance protection option provide what you need?
Our friends at Prospr by Sun Life are here to help you make sure you get the right coverage. They can provide you with a needs assessment and insurance quote, so you know your options. And by meeting with a Prospr advisor, you can get a free financial roadmap.
We know that buying a home is a large financial commitment, and a roadmap can help you budget and plan for your future. Book an appointment today with a Prospr advisor for a free no-obligation insurance quote and a financial roadmap.
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