The Truth About Mortgage Insurance

Mortgage insurance may not be the best insurance option for protecting yourself and your estate in the event of accident or death.

Problem #1
Mortgage Insurance is usually not underwritten until a claim is made. Known as "Post-Claim Underwriting" this means that you may be paying premiums on an insurance policy you should have never been qualified for in the first place, and in the event of a claim the policy can be ruled null and void, leaving you unprotected.

Problem #2
Mortgage Insurance is referred to as decreasing term insurance. The monthly premium remains the same for the entire mortgage, even though the benefit reduces each month. Towards the end of the mortgage, the ratio of premium to benefit is expensive.

Problem #3
The benefit is paid to the financial institution in the event of a claim, not a beneficiary of your choosing.

CBC Marketplace did a very interesting show on Mortgage Insurance, titled "In Denial", which I encourage you to read about here.