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Should I Buy Mortgage Insurance?

Blog by Rebecca Permack | November 7th, 2014


Home buying is full of decision-making. You are bombarded with questions, options, choices every step of the way. Well, I'm here to help make one of those decisions super easy for you.

Just say NO.

Whenever you get a mortgage, you are presented with the option to obtain Mortgage Insurance. Mortgage brokers and banks are obligated to pitch this to you, and it can be seen as an easy option - no blood tests, no home visit from a nurse, etc. It's simple - just initial the box, and boom - you're insured. Easy, right? Have you ever wondered WHY that is? I mean, why doesn't everyone do this, and avoid peeing in the cup and answering the uncomfortable 'lifestyle questionnaire' that the other insurance companies want you to answer? Because mortgage insurance is set up protect the bank, not you!


Here's a table comparing Mortgage Insurance and Life Insurance, provided by my good friends at ThreeSixtyFinancial. Have a look, and the next time you are asked whether or not you want Mortgage Insurance, you know the answer… (hint: it's in the title).





The bank owns the policy



You own the policy



The insurance amount can
only be the exact amount
of the mortgage



You may select any amount of coverage




The bank/lender is the beneficiary



You choose the beneficiary



Outstanding balance of the
mortgage balance is paid upon the
death of the insured



Proceeds are paid to the beneficiary
upon the death of the insured and
can be used as they choose



Amount of coverage decreases as
mortgage decreases, although
premiums remain the same



Coverage remains constant and can be
increased or decreased as you choose
the premium will reflect the new
coverage amount



You need to re-qualify for
insurance if your mortgage is
re-financed or you change lenders.
Your premium will be based on
your new age



You never have to re-qualify for coverage





Coverage terminates when
your mortgage is paid off



Coverage remains in place even after
your mortgage is paid off



Coverage is NOT convertible
to permanent insurance



Coverage IS convertible to permanent



If both insureds die together,
only the mortgage balance is
paid off



If both insureds die together, the benefit
is doubled




Generally no distinction is made
between smokers and
non-smokers and premiums
are the same



Your rates are based on your health,
if you lead a healthy lifestyle, you
will be rewarded with considerably
lower premiums