Term Life Insurance
What are the advantages of owning my own mortgage insurance policy?
An individual mortgage insurance policy, obtained directly from an insurer, puts you in control of your own coverage.
You own the policy. If you decide you want to keep some or all of the insurance after the mortgage is paid off, you may do so.
Your insurance is for a fixed amount, based on the original amount of your mortgage. If you purchase a policy for $200,000 and you die when your mortgage is only $100,000, your heirs will still receive the full $200,000.
You may name whomever you please as beneficiary – spouse, child, grandchild or friend. They receive the funds directly from the insurance company, meaning they are free to decide whether they want to pay off the mortgage, or invest the funds and use the interest to make the monthly payments.
An individually-owned policy is fully portable. When your mortgage renews, you are free to shop around for the best rate. If you decide to change lenders, your individual policy will come with you – completely unchanged from when you first obtained it. You will not have to reapply for coverage, and your premiums will remain unchanged.
The policy is underwritten during the application so you know what to expect if something happens.
An individual policy is underwritten based on your individual circumstances. Someone who leads a healthy lifestyle could end up paying a much lower rate for better coverage.
The primary purpose of life insurance in Canada is to move the financial risk faced by those you leave behind to the insurance company if you make an early exit. There are essentially two types of Life insurance – temporary life insurance and permanent life insurance.
The purpose of Canadian Term life insurance is to provide cash in the event of your death so those who depend on you will have the money to:
- Settle your debts – mortgages, lines of credit and loans (business & personal),
- Complete the funding for your spouse’s retirement plan – very important and why many need some term insurance to age 65 – this is a consideration for those looking for permanent insurance as well.
- For businesses, it can fund a buy/sell agreement or to provide insurance on a key employee to provide cash to find a new person, absorb the financial shock of the loss and have additional funds to pass on to the family of the deceased.
- Freedom of choice with the benefit amount. You can take care of what is most important to you.