Categorized | Finance

Buyer Beware: Bank Insurance

Buyer Beware: Bank Insurance

Buyer Beware: Bank Insurance

Purchasing life insurance through a bank to protect a personal loan or mortgage is an easy and convenient way of buying insurance.

That convenience, however, may end up being surprisingly costly. When you’re borrowing money, the bank may suggest purchasing life insurance dedicated to pay off the loan balance. This is good advice. Purchasing this insurance through the bank may not be such good advice.

Here are some things to consider when purchasing insurance through a bank:

• Health status is not verified until a claim is made which means that you could be paying premiums for many years and not be eligible for the insurance coverage

• If you move your mortgage to another lender or refinance with your current lender, insurance benefits cease! You must re-qualify for your coverage

• If you miss a mortgage payment, your insurance policy may lapse

• Bank insurance is decreasing term insurance, so if the loan principal is paid down faster than anticipated, your insurance premium does not go down

• The bank is both the owner and the beneficiary of the life insurance contract, so the death benefit must be used to repay the mortgage. Depending on interest rates and other economic factors, this is not always in the surviving family’s best interest

• The insurance company, through a bank contract, may have the right to increase premiums at any time.

Alternatively, when you purchase life insurance privately through a licensed insurance consultant:

• Health status is fully verified up-front to avoid denial of claims

• Premiums are guaranteed

• Coverage cannot be cancelled as long as premiums are paid

• The benefit will be paid directly to the family or estate and not to the bank

You’d be wise to speak with an insurance consultant about your particular situation. We have a delightful insurance consultant on our team, so send me an email and I’ll set up a conversation for you.

Heather Holden, PhD, CIM

Wealth Advisor, ScotiaMcLeod

Heather_Holden@ScotiaMcLeod.com

604-661-1523 (direct)

www.HayashiHolden.ca

 

 

 

Be Sociable, Share!

Leave a Reply

Translator

English flagItalian flagChinese (Simplified) flagChinese (Traditional) flagPortuguese flagGerman flagFrench flagSpanish flagJapanese flagArabic flag
Dutch flagHindi flagSwedish flagNorwegian flagFilipino flagHebrew flagIndonesian flagVietnamese flagThai flagHungarian flag

TAN Twitter Feed

  • Kenya is marking a year since the attack on Nairobi's Westgate shopping centre, in which at least 67 people were killed
  • A bomb explosion near the Egyptian foreign ministry in Cairo has killed at least two police officers, security officials say
  • A military aircraft has crashed on a training mission in Egypt, killing six troops, Egyptian officials say
  • Tens of thousands of Albanians of all faiths are attending an open air Mass being celebrated by Pope Francis in the capital, Tirana
  • French vegetable farmers protesting against falling living standards have set fire to tax and insurance offices in town of Morlaix Brittany
  • 5nations 2editions of the Nations Cup will be the focus for the Confederation of African Football this weekend host 2019 2021 tournaments

Subscribe to TAN

Print Edition

US Funds

Canadian Funds