Joey Posted May 26, 2008 Report Share Posted May 26, 2008 Hey all, Paul and I finally bought a house a last week No more landlords We went in to sign the papers and were pressured into signing for Life/Disability Mortgage insurance. Now of course this is a good idea and you just never know what will happen in life, but the charge is outrageous!!!! Does everyone have this insurance and if so, what kind of monthly premium do you pay. I've got a call into a private broker right now. Waiting to hear back on what kind of premium they would charge but am curious as to what is a good/fair monthly premium. Your thoughts please. Joey Link to comment Share on other sites More sharing options...
Gerritt Posted May 26, 2008 Report Share Posted May 26, 2008 (edited) I am against it... for one simple reason... You should already have Life Insurance.. and I have heard claims of peoples houses not being paid off should the unimaginable happen... Being you're first home I believe the house is insured through CMHC anyways.. Get decent Life insurance coverage and forget the cash grab.. Remember this folks make a percentage, Hence the pressure.. My .03 American G I should add... if you are insured through two companies.. good luck in trying to get any money from them as they will be to busy suing one another over who has to pay... Edited May 26, 2008 by Gerritt Link to comment Share on other sites More sharing options...
Billy Bob Posted May 26, 2008 Report Share Posted May 26, 2008 Normally this is a BAD investment. I don't know all you personal info so I can't really make that call from here. However, I did not get the insurance and still wouldn't if I had were buying a home today. Don't know if it's required in Canada but it's not here in the US and almost nobody gets it here. READ the fine print very well. You might find you bought a policy that is not what you really thought is was. Good Luck, Bob Link to comment Share on other sites More sharing options...
bullybass Posted May 26, 2008 Report Share Posted May 26, 2008 (edited) Hi Joey, I have a home equity line of credit through TD that insures only my wife... I have had a melanoma before so they won't insure me... for her we pay around $60/ month for the mortgage insurance through the bank... I have recently changed my insurance company for my home and car and they quoted me $24/ month for both of us with an amount that does not go down as my mortgage does... it is a set payout. So my suggestion is that you talk to your insurance company and see how they compare because I think they will surpass anything your bank offers as the bank payout goes down as your mortgage does. Good Luck!! bullybass Edited May 26, 2008 by bullybass Link to comment Share on other sites More sharing options...
Joey Posted May 26, 2008 Author Report Share Posted May 26, 2008 Great info guys, I really appreciate it. I'm learning alot here and am awaiting a quote from the broker. She also mentioned that the premium I pay if I go through the bank never goes down, yet the payoff of the mortgage does Doesn't seem quite right. Joey Link to comment Share on other sites More sharing options...
bigfish1965 Posted May 26, 2008 Report Share Posted May 26, 2008 Buy a term life insurance policy instead. You can get a few hundred K for not too much cash and the pay out does not decrease, unlike it will on your mortgage life insurance. As far as disability insurance..they are historically hard to collect on. Link to comment Share on other sites More sharing options...
LeXXington Posted May 26, 2008 Report Share Posted May 26, 2008 Hey Joey. Get life and disabilty rather than Bank insurance.. Think of it this way, your on your last year of your mortgage after paying for 20 years.. and something happens the bank one only pays whats left on the mortgage.. I would see a life insurance specialist to make sure. Good luck with your new house Link to comment Share on other sites More sharing options...
fishinggeek Posted May 26, 2008 Report Share Posted May 26, 2008 Good advice here. Mortgage insurance, and pretty much other creditor insurance policies, are often rip offs. You can get much cheaper life and disability insurance outside of your mortgage lender. And if you think about it, because your mortgage outstanding balance decreases over time as you make payments, you are actually getting less and less insurance (for the same amount of premiums) over time, so it becomes more of a rip off as it amortizes. And I believe CMHC insurance does not apply to all homes, or even first time home purchases. It only applies if you have a high ratio mortgage where you have relatively little equity in the home. It does not insure you as a homeowner; it ensures the lender in case you default on the mortgage and they suffer losses after they take whatever action they must (eg. foreclose your home). So if you are paying CMHC premiums, you're effectively paying for the bank's insurance. The larger the downpayment, the less of this you have to pay, and if you pay down enough, you won't have to pay any. Link to comment Share on other sites More sharing options...
Headhunter Posted May 26, 2008 Report Share Posted May 26, 2008 Hey Joey and Paul... congrats on the new house! I have been paying mortgage life insurance since I bought my first house... it was transferable to my new home with a slight monthly increase to reflect the increased value of my new home. I seriously considered canceling that insurance when I was close to paying off my old house, but was convinced to keep it as the rate calculated was based on my age at the time of originally taking out the mortgage insurance. We are paying about $35.00 /month for what I believe to be piece of mind... should anything happen to myself or my wife, at least I know that they will have a roof over the heads! A life insurance policy will cover many costs, but with the cost of funerals today, I personally think that mortgage insurance is a valuable product to me and my family. If your mortgage is not a big one, say under $50k... then insurance may not be for you... but if it's a large one and you know that those you may be leaving behind will be hard pressed to meet the obligation.... money well spent, in my opinion! HH Link to comment Share on other sites More sharing options...
John Posted May 26, 2008 Report Share Posted May 26, 2008 Congrat's on the purchase Joey and Paul, you will not regret it. As far as bank purchased life and disability insurance is concerned most are not worth the paper they are written on. The language is designed to confuse and you will receive zero help from the banks other than they will tell you that you need it. Get your insurance company to quote you and do your own due diligence. You may require a medical. I know of two people who had so called life insured mortgages through bank purchased insurance. Neither collected a penny when their husbands died Caveat Emptor! Link to comment Share on other sites More sharing options...
solopaddler Posted May 26, 2008 Report Share Posted May 26, 2008 There's already been some solid advice, can't really add to it. More importantly congrat's on the house, that's big news! Link to comment Share on other sites More sharing options...
steve_paul Posted May 26, 2008 Report Share Posted May 26, 2008 Can't add much on the insurance question Joey but congrats on the house purchase. Hope you guys have many happy years there. Link to comment Share on other sites More sharing options...
Billy Bob Posted May 26, 2008 Report Share Posted May 26, 2008 One last note is you're really insuring the banks investment not yours unless you have a HUGE down payment on the house, let's say 50% or more. Do as others here have suggested, get yourself some Term Life Insurance instead. It is a MUCH better investment especially if you are still young (under 40). Link to comment Share on other sites More sharing options...
SlowPoke Posted May 26, 2008 Report Share Posted May 26, 2008 Congratulations Joey & Paul I don't think this a black or white/right or wrong issue without considering many other things. For me, mortgage insurance works at $17.43/month, I declined the disability portion. You have to consider what other coverage you have through your employer(s) or other lenders (credit cards/line of credit) and decide if you have enough insurance. Your choice then is mortgage insurance or a term policy. A term policy may not be such a bargain depending on age, smoking and current health issues. Mortgage insurance is cheap by comparison but as you mentioned, it never goes down. At the front end of you mortgage you might benefit from it and maybe drop it after a ten years. There comes a time when your mortgage insurance premium will buy you more in term coverage than the balance of your mortage. -Brian Link to comment Share on other sites More sharing options...
SlowPoke Posted May 26, 2008 Report Share Posted May 26, 2008 Being you're first home I believe the house is insured through CMHC anyways.. This covers the lender should you default on high ratio mortgage. If you can't pay, you're on the street but the lender can sleep peacefully knowing thier liabilty is covered. Link to comment Share on other sites More sharing options...
ketchenany Posted May 26, 2008 Report Share Posted May 26, 2008 Congrats on the house, great move. I was actually told by the bank not to buy theri insurance i.e. cost was a and the payout factor. I got a great rate on my own and covers everything just incase something does happen. Now if we all could "lock" in on gas prices Link to comment Share on other sites More sharing options...
Entropy Posted May 26, 2008 Report Share Posted May 26, 2008 I choose not to take it, but YES they do pressure you to sign for it. When I was signing my mortgage, the woman at the bank was getting mad at me for saying NO after each time she went through a different 'talk'. If I die my life insurance through my employer, will end up covering the cost of my house, my wife will be ok. In the mean time we have an extra $50 a month to invest in the house or an investment. If you don't need it get rid of it. I figure there is a point at which the costs and benefits of life insurance meet. For me that is looked after through my employer and my wife's employer. We are not worth millions dead, but should be ok if something were to go wrong in our grand scheme of life. Entropy Link to comment Share on other sites More sharing options...
rob v Posted May 26, 2008 Report Share Posted May 26, 2008 mortgage life and disability insuarance through a bank is priced similar to group insurance to keep prices manageable and coverage simple. Premiums are based primarily on your age, the amount and ammortization of your mortgage and in some cases whether you smoke or not. Typically there aren't alllowances in the premiums for other health aillments ie they don't charge you a premium for less insurable risks like some private policies might. As someone pointed out, depending on your age at the start of your mortgage the coverage you get vs cost may actually be cheaper than private coverage, but as your mortgage gets paid down your coverage decreases vs the stable premium. Having said that, most private policies have premiums that increase with age for the same coverage, but your coverage doesn't usually go down. The other thing about private coverage to keep in mind, once you've got it and you keep your premiums paid you keep it. With creditor insurance, if you should happen to change homes and take out a new mortgage if it isn't with the same lender/insurance company you may or may not qualify for coverage then - for things like health reasons etc. In other words private insurance is a bit more portable/flexible. As well, if something should happen, with private coverage your beneficiary gets cash instead of a paid off house - which could be important at a time like that. Arranging insurance through your bank is usually much simpler than private coverage (one stop shopping). bottom line, as someone else mentioned, it's not black and white, and not just about cost. Many people are taking the private insurance route, and many others take their insurance out through their lender. But you shouldn't feel pressured by your bank - bank's have to be careful about "tied selling" , ie. giving their customers the impression their mortgage approval is contingent on you taking their insurance also. Most of the time life insuarnce overage arranged through the bank is supposed to be an optional thing - and if the bank insists that your mortgage be life insured you still have the option of taking out a private policy and assigning if necessary. Just a little insite from someone in the industry. Rob V . Link to comment Share on other sites More sharing options...
Terry Posted May 26, 2008 Report Share Posted May 26, 2008 way to go on the new house I don't believe in buying the Mortgage insurance, life insurance is cheaper and I have disability insurance at work, I told them no thanks the broker said they may not be able to get me a mortgage without it so I said, then I will go else where ......they changed their tune real quick when I said that Link to comment Share on other sites More sharing options...
ecmilley Posted May 26, 2008 Report Share Posted May 26, 2008 congrats on the house, I deal with life insurance, rrsp and debt management on a part time basis if you have any questions shoot me a pm I'll be happy to help ya out Link to comment Share on other sites More sharing options...
KyleM Posted May 26, 2008 Report Share Posted May 26, 2008 We needed to put up (I believe) 24% to avoid CMHC so in lots of cases it does not apply. Also, as posted earlier, CMHC has nothing to do with the buyers...all your doing is picking up the bill for your lender. Joey, I feel for you...All this is new for us and I have a feeling we're about to discover what we needed and what we dont. Link to comment Share on other sites More sharing options...
fishing n autograph Posted May 26, 2008 Report Share Posted May 26, 2008 My wife and I thought that it was a good idea to get it...basically heart problems and cancer run in both of our families...so, if one of us gets sick..bye bye mortgage.... My wife's uncle bought a house 295k house and in 2 years had a heart attack...so now he has no more mortgage payments and life is a little easier for him and his family Link to comment Share on other sites More sharing options...
BillM Posted May 26, 2008 Report Share Posted May 26, 2008 Just a sec, he had a heart attack, didn't die and they paid off his mortgage? Link to comment Share on other sites More sharing options...
lew Posted May 26, 2008 Report Share Posted May 26, 2008 Congratulations on the new home Joey, that's really great news !! Link to comment Share on other sites More sharing options...
Billy Bob Posted May 26, 2008 Report Share Posted May 26, 2008 LOTS of info for you to thrash through but the bottom line is if the "seller" is pushing hard it's never for your benefit but rather theirs. Think about it rash-ably, on each mortgage payment you are paying a mortgage insurance payment that will pay less and less for each month going forward. Now on a "Term Life" insurance policy the payout is the same no matter when you die AND you can do whatever you wish with the money once your second half has moved on to better life unlike a mortgage insurance payment where it has to go to pay off the lender NOT you. No one has tried to steer you in the wrong direction but this is something you must spend more time on that you realize because the decision can get pricey. DON'T just throw money at a problem but do it rather well inform so you know you have made the best decision possible. Link to comment Share on other sites More sharing options...
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