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You may have noticed I'm not a big fan of bank mortgage insurance!
I think that having insurance in place for your family is really important, and if you are going to to the trouble of putting insurance in place ideally you buy a plan that puts you in the driver's seat in terms of the premiums and coverage.
This is a very unselfish and potentially life changing purchase - you're buying it to make sure you and your loved ones are taken care of - so taking a little extra time to find out more is worth it.
#1: coverage should be guaranteed after your policy is approved and issued. This includes the amount you're covered for, the contract wording and premiums.
With a bank plan, you are part of a group contract and not an individual contract. Guess who is the owner and beneficiary of the group contract? The bank! Your bank coverage is not guaranteed, rates are not guaranteed, and yes, unfortunately, the contract wording can be changed by the lender without your approval. Please read the fine print because there may be exclusions such situations as for acts of war, terrorism or a pre-existing medical condition.
With an individual plan, for as long as you continue to pay the premiums, your contract is guaranteed and cannot be changed by the insurer once it is approved and issued.
#2: you should be able to choose your own beneficiaries. With a bank life insurance plan, the bank is always the beneficiary. One of the great benefits of having an individual policy is that you can select exaclty who you want the insurance proceeds to be paid to. These proceeds are paid directly and tax free to your beneficiary who can use the money as needed. That may not necessarily mean retiring the mortgage, as it could be more important to pay for time off work or to fly in family members.
#3: your coverage should be customized and portable. Bank insurance is akin to one-size-fits-all clothing. The plans are the same for every customer and don't take into account the specifics of your life and situation.
With an individual plan, you can tailor the coverage to take into account items other than a mortgage, such as a student loan, university fund for your kids, or the fact that you are a business owner.
If you change lenders, your insurance should move with you uninterrupted. Individual insurance is totally portable and not impacted if you change jobs, change cities, or pay off or move your mortgage. With a bank plan, your coverage ends if you change lenders.
#4: critical illness insurance should be comprehensive. Some bank plans cover only three illnesses under their plans, and there may be pre-existing conditions clauses that you aren't aware of in the fine print.
With an individual CI plan, you can design your plan to include more than 20 conditions and even opt to get a return of premiums if no claims are made. Plus, your coverage and costs are guaranteed.
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We're often able to save our clients 30% compared to their current bank plan premiums. For a free rate comparison of your bank mortgage insurance and individual protection, please call us at 604.872.2866 or request a quote here.
Sincerely,
Rachel von Sturmer
Did you know the following facts about mortgage and creditor insurance offered through banks and trust companies?
1. They are “age banded” and your rates may increase as you enter the higher age bands. The premium that the bank quotes you may be valid for only one year.
2. These insurance programs do not offer contractually guaranteed rates. The insurer may increase their rates at any time without consultation.
3. The program can be cancelled with thirty days notice, potentially leaving you without mortgage life or critical illness insurance coverage.
4. Coverage terminates if you move your mortgage to another lending institution.
5. Creditor mortgage coverage does not leave you the option of taking the death benefit in a lump sum cash payment and continuing to pay the mortgage, which may be advantageous in a rate-increasing environment.
6. It also does not allow you the option of retaining the insurance coverage once your mortgage is paid off.
7. Unlike an individual Term Life Insurance policy, creditor mortgage coverage is not a legal contract that can only be terminated by you.
8. If a spouse dies prematurely, the other spouse may no longer be insured.
9. When a mortgage is retired early through a bank or trust company, a penalty is assessed. This penalty generally equals approximately three months interest. This penalty cannot be insured as part of the “creditor mortgage” coverage offered by banks and trust companies. However, it can be insured as part of an individual term insurance policy.
10. Under creditor life coverage people with health issues are not offered coverage. Generally, if any of the health questions are answered “yes” on the creditor’s application, coverage is automatically denied – and no additional underwriting takes place. Individual policies applications offer investigation into the history and current status of the health condition and, in many cases, coverage can be obtained at a slightly higher than normal premium.
The advantages of an Individual Term Life insurance policy are:
1. Premium remains consistent and guaranteed for the term of your policy.
2. Coverage will never decline even as you pay down your mortgage.
3. You can choose who the beneficiaries of your policy are.
4. In the event of a premature death, your beneficiaries can either pay off the mortgage right away or invest the money - it’s their choice.
5. You can keep the coverage even after you pay off your mortgage or move to another lender.
6. Only you can cancel the policy - not the bank that holds your insurance.
7. The insurance company does a full underwriting before the policy is issued, not at time of claim.
8. If one spouse dies prematurely, under a combined plan the other spouse is still insured.
For more information or a free quote, please call Rachel von Sturmer at 604.872.2866 or email rachel@truebenefits.ca. Or, you can request a quote online right away.
Benefits Plans
True Benefits can help you find the best employee benefits plan.
We have access to over 25 insurers, including the Chamber of Commerce Group Benefits Plan.
Life Insurance Rates
Here are monthly Term 10 Life Insurance rates for a healthy, non-smoker as of March 2012:
| Women | |||
| $250,000 | $500,000 | $750,000 | |
| Age 25 | $12 | $18 | $24 |
| Age 35 | $14 | $22 | $30 |
| Age 45 | $22 | $35 | $51 |
| Age 55 | $52 | $88 | $130 |
| Men | |||
| $250,000 | $500,000 | $750,000 | |
| Age 25 | $18 | $28 | $39 |
| Age 35 | $19 | $29 | $42 |
| Age 45 | $30 | $53 | $78 |
| Age 55 | $72 | $135 | $201 |
For a free personalized insurance quote, click here.
Clients Say:
"Rachel is professional, courteous and very knowledgeable while providing outstanding customer service. She is well prepared, delivers personal service, and understands our desire to provide the best possible benefit plan to our employees in the most cost effective manner."
"I appreciate having a person who is both local and accessible, and was impressed with the initial presentation outlining the options available to us. It is extremely helpful to have Rachel advocating on our behalf."
"True Benefits has totally met our needs. Rachel gives personalized attention, and is very thorough. She has suggested many good ideas that we have used to benefit our employees."
"I have referred many clients to Rachel in the past, and without exception, they have all commented to me on her professionalism, vast industry knowledge, great service, and fast response time."
Thank you for everything that you have done for our family. We are grateful for all your hard work. We look forward to working with you again in the future.
"True Benefits has an understanding and awareness of the importance of an effective benefits program. They're proactive in looking for cost effective improvements to plan design and cost containment strategies. My expectations were exceeded - Rachel delivered as promised in a timely manner."
"Thank you Rachel. Great service as always. You anticipated our needs."
I used True Benefits to sort through a tricky health insurance issue related to immigration status and an expired work permit. Rachel recommended a cost effective solution and quickly verified the policy was the best choice for my situation. My new health coverage was effective within 2 hours of my initial call to Rachel! I highly recommend working with Rachel at True Benefits for cost effective solutions and friendly and efficient service.
Your attention to detail and willingness to never to never take "no" for an answer on my behalf left me in awe of your business ethics.
I will continue to use your services, based on your work ethic and my ability to trust that the policy you are suggesting is perfect for me.
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