Why go for Mortgage Insurance? Here are the benefits

Buying a new home is definitely one of the key investments you will ever make.

You have worked hard for this and have found your dream home. You have even purchased home insurance to cover your legal and property liabilities. Now, all that is left to do is to unpack your boxes and settle in – but, have you got insurance for your mortgage?

Getting Mortgage Insurance

What would happen if the unthinkable happens to your spouse? Would you be able to cover payments for your mortgage and your expenses? Having a mortgage insurance ensures that you are able to pay back all or a part of your financial obligation in case of death.

You may also choose to get additional coverage in the form of disability or critical illness insurance, thus keeping your finances safe from life’s sudden surprises.

The Benefits of Mortgage Insurance

You may choose to buy a mortgage insurance plan directly from a bank or consult a financial advisor for the same. It is often recommended to talk to a financial advisor before making the purchase to ensure you are neither overinsured nor underinsured in any way.

Below are a few benefits of purchasing mortgage insurance:

  1. You choose your beneficiaries and own the contract

When you purchase mortgage insurance from a bank, the bank owns the beneficiary as well as the contract. On the other hand, if you purchase the same from an insurance company with the help of a financial advisor, you own the contract and are free to name any beneficiary of your choice.

Your beneficiary may choose to use the funds to repay the loan, pay for debts or for something else.

  1. Your coverage is guaranteed and fixed

When you purchase mortgage insurance from an insurance company, your coverage is fixed and will remain the same for the entire duration of the loan.

For example, if you have $300,000 mortgage and have purchased a $300,000 mortgage insurance plan from an insurance company, the coverage will remain fixed even with the decrease of your mortgage balance.

With a bank, the amount of mortgage coverage decreases with the decrease in mortgage balance. The premium, on the other hand, remains the same.

  1. You may be allowed to convert your mortgage insurance plan

Certain insurance companies may allow you to convert your mortgage plan to a permanent life insurance plan. If you choose to convert, your premium will remain the same and you don’t even have to take a medical examination. The policy will stay in force till your death.

For more information on mortgage insurance, get in touch with our advisors. Also, refer to our blog on a highly recommended mortgage insurance plan – Manulife One that allows you to stay in full control of your mortgage. A case study is also provided in the blog for an easy reference.