Take Control of Your Mortgage Insurance with Personal Term Life Insurance
As we enter the spring home buying season, it seems timely to talk about creditors insurance from your bank. This type of insurance is often offered alongside mortgages, promising to pay off your remaining balance in the event of death. However, there's a better option that gives you more control and flexibility: personally owned term life insurance.
Here are some benefits of choosing personal term life insurance over creditors insurance from your bank:
- You own the insurance policy, not the bank.
With creditors insurance, the bank owns the policy and is the beneficiary. This means that if you pass away, the payout goes directly to the bank to cover the remaining balance on your mortgage. On the other hand, personal term life insurance is owned by you, and you get to choose who the beneficiary is. This could be your spouse, children, or anyone else you designate. If your bank requires life insurance as a condition of providing financing, you can collaterally assign your personally owned life insurance policy to them, meaning that in the event of your death the mortgage would be paid off and the remaining amount of life insurance would go to your loved ones.
- The face value of the coverage stays level.
With creditors insurance, the coverage decreases over time to match the balance of your mortgage. This means that you're paying the same premiums for less coverage as you pay off your mortgage. With personal term life insurance, the face value of the coverage stays level throughout the term of the policy. This ensures that your loved ones receive the same amount of coverage, regardless of the outstanding balance on your mortgage.
- Coverage is portable.
If you refinance your mortgage with a different bank or move to a new home, your personal term life insurance policy moves with you. This means that you won't have to reapply for coverage, and you'll maintain the same level of protection regardless of where you live or which bank you choose to work with.
In conclusion, while creditors insurance is a convenient option, personal term life insurance provides greater control, flexibility, and peace of mind for you and your loved ones. It's worth noting that the monthly cost of personally owned term life insurance is often similar and sometimes lower than the cost of the creditors insurance offered by the bank. As you enter the busy spring/summer real estate season, be sure to consider your insurance options carefully and choose the policy that's best for you. Call us at 204-622-7640 or book a meeting online with one of our advisors to learn more.
Riley Love, MBA, CCS, BSc. Pharm
Partner/Financial Advisor – Love & Persson Group