Yes, its worth it to make the switch to real Life Insurance!
Here are some reasons why:
Let’s explore a common scenario:
You are finishing up your Mortgage documents and the broker/banker asks if you would like to apply for the Life Insurance. You quickly glance at your spouse and you both conclude that obviously you want to be insured for the value of the mortgage if one of you dies. It is a no brainer decision. So, they ask you a couple questions about your health history, you check no and have your application approved.
Such an important decision is treated as trivial matter as an add on by someone who is rarely even licensed to sell real Life Insurance products.
Now is the time to contact a trusted licensed Insurance professional!
Let’s dive in and explore the reasons why shall we?
Portability of your Life Insurance
First of all, a real Term Life insurance policy is portable. This means that you can change your Mortgage provider at any time without having to reapply for Life Insurance since it is kept separate from the mortgage instead of being built into it. This makes it easier to rate shop on renewals as you would be tied to one broker/bank because your health may have changed or your worried your insurance rates may go up.
Level Death Benefit
Term Life Insurance policies almost always have level death benefits for the life of the term. This means even as you pay down the balance of the mortgage, the insurance will still pay out the original amount. This is different than the mortgage insurance which just pays the balance of the mortgage.
Named Beneficiary
With creditor insurance the Mortgage provider is the beneficiary. This means the balance is paid off if the claim is approved. With Term Life Insurance you can name your beneficiary who can use the funds to pay it off or do whatever they would like to if they see a better opportunity while interest rates may be low. This also includes any surplus that may pay out above the balance of the mortgage.
Convertibility to Whole Life Insurance
Almost all Term Life insurance policies have the option to convert to Whole Life Insurance or another permanent policy without any underwriting. This is a major benefit as it keeps the insured from having to do a new medical should they wish to lock their policy in for life beyond the mortgage amortization. With creditor/mortgage insurance this option does not exist.
Ability to Pool your insurance to save Money
By buying your term policy separately you can increase the benefit to include Life insurance for other needs such as income replacement, other credit products, business needs, etc. This can save a substantial amount of money on premiums each month and free up cash flow for other important financial matters.
If all of this isn’t enough here is one more:
Post claim underwriting with creditor/mortgage Insurance
Most Life Insurance is full underwritten at the time of application before it is approved. This can give you confidence when you need to file a claim that the insurance will be there for you. This is different than creditor/mortgage insurance which just asks a few questions and issues you coverage. There is a far higher likelihood of a claim being denied as the insurance company could decide that there is a technicality where the answer on your application is incorrect.
It is not worth the risk.
There are more reasons to work with a Life Insurance agent as they should explore your needs around other situations that could result in financial disaster such as a disability or a critical illness where your family or business finances may be at risk.
It is worth the time to contact a licensed advisor to have this important discussion!
Feel free to message me for more information!