What's the difference between traditional mortgage insurance and Better Mortgage Insurance?
If you're looking into buying a new house or condo, you may be offered traditional mortgage insurance when you purchase. But what is the difference between traditional mortgage and Better Mortgage Insurance? It's essential to know so you can find out which is best for you.
How traditional mortgage insurance works
Traditional mortgage insurance is a policy option for home buyers to get insurance for their mortgage through the bank or the lender. This type of insurance covers only the exact amount of your mortgage and will reduce as you pay your mortgage.
In the event of your passing, the bank or the lender is your beneficiary and will receive the death benefit to pay off the existing mortgage.
How Better Mortgage Insurance works
Better Mortgage Insurance refers to a range of policy options offered by an insurance company that provides a lump sum to a beneficiary you decide. This lump sum can be used in various ways, including funeral expenses, childcare, paying off debts, or as income replacement.
How is life insurance different than traditional mortgage insurance?
A Better Mortgage Insurance policy can offer a lot more than traditional mortgage coverage. Here are some key reasons Better Mortgage Insurance is different from traditional mortgage insurance.
More control
Traditional mortgage insurance has the bank or the lender as the beneficiary who uses the death benefit to pay the existing mortgage. A Better Mortgage Insurance policy lets you decide the beneficiary and allows them to choose how to use the benefit.
Versatile benefits
Using a Better Mortgage Insurance policy for your mortgage provides a tax shelter benefit. The insurance payout can clear a mortgage, funeral expenses, and other debt.
Guaranteed premiums
With Better Mortgage Insurance, your rates are guaranteed for the length of the policy. Traditional mortgage insurance rates are not guaranteed and may increase during the policy period.
Policy portability
Better Mortgage Insurance policies are not tied to a bank and are more portable if you move homes or switch lenders. You need to reapply for traditional mortgage insurance when you renew your mortgage and move lenders.
Comfort with no surprises
With a Better Mortgage Insurance policy, you are approved at the time of application, so there are no surprises at the time of a claim. Whereas traditional mortgage insurance only gets approved at the time of a claim.
Extendable coverage
If you get additional term life insurance coverage, which provides coverage for a set term, the coverage will renew automatically. Or you can choose to switch to a permanent life insurance policy with no medical tests.
What is the best option for you?
People have different needs, meaning the best option depends on your situation. CAA Protect offers Better Mortgage Insurance - life insurance for your mortgage.
Our licensed insurance advisors can help answer your questions and find the policy with the right coverage you need at the right price. For more information, call 1-800-709-5809 or visit the CAA Protect website at CAAProtect.ca.