Which one is right for you?

Home buying is a major life-changing decision. There are so many things to consider and once you’ve made that decision, you’ll probably be taking out a mortgage, which brings us to yet another big decision: how best to protect that investment in the event of a tragedy? Ensuring your loved ones are not stuck with the burden of paying the mortgage or selling your home if you were to pass away. This is where the question arises Life insurance or mortgage insurance?

Which type of insurance plan suits your needs?

Two popular types of insurance will allow you to ensure that your mortgage is paid after death: mortgage insurance or life insurance. If you don’t know what these are, here are some basic differences:

• Mortgage insurance (also known as “mortgage life insurance”) is an insurance plan purchased from your mortgage provider (mostly banks) that covers an outstanding­ mortgage debt if the mortgage borrower dies. This insurance will cover all or part of your outstanding mortgage balance. Financial institutions have maximum insurable limits­­­ and, if your mortgage is large, this limit may not cover 100%.
• Life insurance, on the other hand, is purchased from an insurance company or financial institution. in the event of a death, pays an amount of money you chose before and can be put towards anything you choose. This can, but does not have to, include your mortgage.

Life insurance can be purchased for a term, for example of 10, 20, 30, or 40 years, after which the policy must be renewed; Universal life or for your whole life. The latter type of life insurance plan is called “permanent life insurance” and does not need to be renewed if you pay your premiums. In all cases, you are only covered if death occurs while the policy is in force.

Here are some things to consider when deciding whether mortgage insurance or life insurance is best for you:

At the end of the day…

Overall, Personnel life insurance offers greater flexibility and control than mortgage insurance and is probably the better choice for most. The premiums on a life insurance plan are a small price to pay for the peace of mind that comes with knowing your loved ones are taken care of.

However, when it comes down to it, only you can decide what’s best to protect you and your loved ones, and which type of insurance plan is right for you. For any question regarding insurance, investment, for a no-obligation insurance quote, consultation & second opinion. Please feel free to reach out!

Swinder Jodhka

416-825-3091

Broker, SSJ Financial Services

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