Mortgage Protection

Your home is likely the biggest asset you’ll ever own. So how can you protect it in case something were to happen to you? 

When you take a mortgage from a bank, they offer you and sometimes even push you to take mortgage protection from them. But is that the best protection which gives you the maximum value for your money or can life insurance do a better job at this ? Learn about the difference between mortgage insurance and life insurance to know which one better protects your home and family.

After going through the comparison below, it will become crystal clear to you that life insurance is a clear winner because its benefits far outweigh those of mortgage insurance from the bank.

(The table on next page should start from here but I could not delete the space)

Coverage from Insurance Co.	Coverage from Bank / Financial Institution
You appoint a beneficiary who can use the money in whatever manner he/she wishes. If it is wiser to invest the proceeds rather than pay off a low interest mortgage, the beneficiary has the choice.	Lender/Bank is the Beneficiary. In the event of death, your family has no control over this money.
The death benefit remains level throughout the period of coverage, so the cost to benefit ratio works out much cheaper than the bank.	Even though the death benefit is decreasing over the term, the premium does not come down, it remains level over the term. This makes it more expensive over the period of time.
Your policy is portable. If you transfer your mortgage to another bank, your insurance remains in force - no need to re-apply at a higher premium due to advanced age and prove your insurability. You are protected from the danger of losing your insurance because of a change in your health.	In most cases, if you take your mortgage to another bank, you lose your protection. You must then submit satisfactory evidence of health and are subject to the current rate charged by the new mortgagor which will be  higher due to increase in age & could be even more exorbitant if health changes.
Policy can be modified as needed. You may select any insurance amount.	Ō The face amount can only be the exact amount of your mortgage (no more, no less).
Full policy amount is paid to the beneficiary upon death of insured.	Only the outstanding portion of mortgage is paid to the bank while the beneficiary gets nothing to take care of increased financial burden resulting from death of an earning member.
Not being attached to any debt, your coverage is not affected by any changes to your mortgage. You can continue it even after the mortgage is paid off.	Your coverage will terminate if your mortgage is repaid, assumed or in default.
All underwriting will be done before the policy is issued, so that there are no surprises later on. Therefore, you have the peace of mind knowing that your claim will be paid out when needed according to the terms of your contract.	A big issue with insurance from the bank is that they generally have post claim underwriting, which basically means that the underwriting will be done after the insured has died and claim has been submitted. Due to this, they may discover some conditions that could deny a claim payment, which has actually happened in many cases & their families had to suffer for this.
Money back  plan is available which allows you to take back all your premiums by the time your mortgage is paid off.	Such a plan is not available with any   bank.
Your rates will vary depending on your smoker status.  Non-smokers receive lower rates.	Generally, no distinction is made between smokers and non-smokers.
You can personalize your policy by adding various attached plans: Waiver of Premium, Child Insurance, Spousal Insurance,        -   Guaranteed Insurability etc.	Very limited benefits