Personal Finance

Home insurance question, advice needed!!

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  • Feb 22nd, 2013 1:46 pm
Newbie
May 13, 2010
21 posts
toronto

Home insurance question, advice needed!!

Hello all, currently, I have my mortgage with RBC and paying for their HomeProtector insurance, the cost is 0.73 per every 1000 dollar of my outstanding mortgage of 130,000$, which works out to be around $170 per month, anyway, I would like some advice on some better alternatives in term of pricing and benefits. I think paying $170 is too expensive or am I wrong? any advice would be greatly appreciated.

details of the the rbc homeProtector insurance is as follow:

HomeProtector Life and Disability Insurance provides you with a secure financial safety net for your mortgage precisely when you and your family need it most.

* pays off your outstanding insured RBC Royal Bank mortgage(s) in the event of death (up to $500,000)
* pays your regular mortgage payment(s) in the event of a disability (up to $3,000 per month for a maximum of 24 months)
* preserves your personal insurance
* safeguards your savings for what they were intended

Papayaz
18 replies
Deal Expert
User avatar
Feb 24, 2003
22156 posts
10321 upvotes
Toronto
Do you have any other forms of life insurance, the proceeds of which could be used to pay off the mortgage?
Newbie
May 13, 2010
21 posts
toronto
audit13 wrote: Do you have any other forms of life insurance, the proceeds of which could be used to pay off the mortgage?
no I dont, the only other insurance I have is property insurance, that is not really life insurance related I believe.
Deal Expert
User avatar
Feb 24, 2003
22156 posts
10321 upvotes
Toronto
papayaz wrote: no I dont, the only other insurance I have is property insurance, that is not really life insurance related I believe.
I asked because some people use their life and disability insurance as a subsitute for mortgage insurance.
Deal Addict
Jun 12, 2008
1622 posts
1206 upvotes
Ripley
Price out separate life and disability insurance with a broker. With that type of insurance you can use the money the way you need to - other debt, food, care, etc. It is usually cheaper than going through the bank.
Deal Expert
User avatar
Aug 18, 2005
21223 posts
5939 upvotes
Burlington-Hamilton
This kind of insurance is extremely EXPENSIVE compared to the alternatives. It falls into the same category of "paint protection" at the car stealership. It's just another way for them to get money out of you by grossly overcharging for something simple.

This is one of the only kinds of insurance where the benefit goes down and you cannot name your own beneficiary.

Just get term life insurance and AFTER that, cancel the waste of money known as HomeProtector.
- casual gastronomist -
Deal Addict
Mar 10, 2010
1595 posts
589 upvotes
Jucius Maximus wrote: This kind of insurance is extremely EXPENSIVE compared to the alternatives. It falls into the same category of "paint protection" at the car stealership. It's just another way for them to get money for you by grossly overcharging for something simple.

This is one of the only kinds of insurance where the benefit goes down and you cannot name your own beneficiary.

Just get term life insurance and AFTER that, cancel the waste of money known as HomeProtector.
Totally agree. Mortgage insurance is a complete rip off (and it only protects the lender). Get term insurance with enough of a payout to pay off the mortgage and look after your funeral expenses and family, it'll be MUCH cheaper in the end and more useful.
Newbie
May 13, 2010
21 posts
toronto
thanks for the advice guys, will definitely make a switch~!
Sr. Member
User avatar
Jan 8, 2009
830 posts
66 upvotes
GTA
You need to switch over to individual life and disability insurance asap. In most cases, that will be cheaper than your mortgage insurance.
Insurance & Financial Advisor

All posts on this forum are for information purpose only and can't replace your policy contract. Please contact your own broker, agent or company before acting on my suggestions. There is more to insurance than just price!
Newbie
Aug 16, 2010
22 posts
Nova Scotia
That is far too much! I partnered with a mortgage broker to start a new insurance company for reasons just like this. That and we had some pretty innovative ideas to get underwritten. 9 times out of 10 we come in with a 50% lower premium than a major bank or credit union.

To give you an example (Although I do not know how old you are)
With your outstanding balance of $130,000 and an estimated payment of $800/month for a 60 year old our premium is $110.00 a month for life insurance and $45.60 for disability ($155.75 total). Yes that is for a 60 year old. Not only that our program uses a blended rate which means we have the same rates for smokers and non-smokers and still charge a lower premium. This is legitimate coverage as I am a licensed agent in Nova Scotia and I have had this program underwritten through Great West Life.

So either get quoted through a private financial adviser or a private mortgage insurance provider such as ourselves.
Deal Addict
Aug 24, 2002
3569 posts
40 upvotes
Sask
jstirling wrote: Not only that our program uses a blended rate which means we have the same rates for smokers and non-smokers and still charge a lower premium.
Interesting but then aren't non-smokers overpaying to subsidize the smokers?
Newbie
Aug 16, 2010
22 posts
Nova Scotia
wesboag wrote: I’m assuming you are talking about term (10) as a substitute for his/her mortgage insurance. If so, $110/month for term 10 ($130,000) for a 60 year old is ludicrous. That’s close to $30-$45/month overpriced.
lol Yes. It is a bit unethical to issue creditors insurance at 60 when it would expire in just 5 - 10 years. It was to emphasize how much she is overpaying. You are right. A quick quote through Manulife is $72.60/month.
Neil wrote: Interesting but then aren't non-smokers overpaying to subsidize the smokers?
In a way yes. But because we still have lower premiums than almost everyone in the Canadian market it is still a better program. Let me explain: Although I do sell the program privately myself, it is designed for mortgage brokers to compliment their loans. Most brokers haven't a clue what the insurance entails or how the underwriting works and most group creditor programs are post-claim underwritten. Ours is not and with the blended rate that further eliminates the risk that the coverage is improperly sold by said mortgage broker.

To be honest I started this endeavor to bring the involuntary job-loss coverage to Canada. It took 8 months to get underwritten but we did it. It is neat. If you become laid-off we pay your mortgage for 6 months up to $4,000 a month.
Newbie
Aug 24, 2010
3 posts
hello guys,
I happen to have the exam same coverage with my mortgage at RBC. Can someone elaborate on what Neil said? I am a smoker, 56 years old, have about 10 years on the mortgage. am I better of with the bank? :?:
Sr. Member
Dec 15, 2008
652 posts
58 upvotes
Vancouver, BC
My beloved RFD community I need advice on this HomeProtector Insurance Premium $124 monthly. Below is the scenario. Is it worth it? What options would you do in our case?

There are four names co-signed on this 5 year Conventional Variable Mortgage currently 2.55% rate with 26 months left to maturity.
Principal Balance Remaining $386,000
HELOC Balance $42,000 (I don't think this matters but thought I'd present it to give you complete picture)

Co-signer #1 N/A
Co-signer #2 has Life Insurance only on mortgage
Co-signer #3 has Life & Disability on mortgage
Co-signer #4 N/A
Sr. Member
Dec 15, 2008
652 posts
58 upvotes
Vancouver, BC
How much would an equivalent type of coverage cost with actual insurance companies such as Manulife, Sunlife?
Deal Addict
User avatar
Feb 1, 2005
2204 posts
227 upvotes
exhaust wrote: My beloved RFD community I need advice on this HomeProtector Insurance Premium $124 monthly. Below is the scenario. Is it worth it? What options would you do in our case?

There are four names co-signed on this 5 year Conventional Variable Mortgage currently 2.55% rate with 26 months left to maturity.
Principal Balance Remaining $386,000
HELOC Balance $42,000 (I don't think this matters but thought I'd present it to give you complete picture)

Co-signer #1 N/A
Co-signer #2 has Life Insurance only on mortgage
Co-signer #3 has Life & Disability on mortgage
Co-signer #4 N/A
What are the ages of the co-signers? How long to you think you'll have a mortgage for, longer than 26 months I'm assuming?

You should see what the term insurance rates are (for the term of how long you think you'll have the mortgage for) for $400,000 coverage (you may not find anything in that amount and may have to bump it to $500,000) and see if that's any cheaper.

It's hard to tell if premiums are reasonable without the listed risk profiles (age, smoker, sex, etc.).

But as stated above, usually mortgage insurance is very expensive when there are alternatives, namely term life insurance.

If #1 or #4 dies (not sure how much, if any, they contribute to the mortgage payment?), then #2 and #3 will have to pick up the slack without any payouts from their deaths.

On the other hand, if #2 or #3 dies, then the mortgage should be paid off.

Who's more likely to die first and do they pay a substantial chunk of the mortgage? If they do, then they should have the life insurance, and without any facts I would suggest looking for term coverage.
Sr. Member
User avatar
Jan 8, 2009
830 posts
66 upvotes
GTA
Like Shopper said, need more details to compare rates.

In general, term insurance is a lot better than mortgage insurance.
Insurance & Financial Advisor

All posts on this forum are for information purpose only and can't replace your policy contract. Please contact your own broker, agent or company before acting on my suggestions. There is more to insurance than just price!
Sr. Member
Dec 15, 2008
652 posts
58 upvotes
Vancouver, BC
Thanks for the input so far! Here's more specifics.

Co-signer #1 (61 yrs old female) N/A
Co-signer #2 (37 yrs old female) has Life Insurance only on mortgage
Co-signer #3 (35 yrs old female) has Life & Disability on mortgage
Co-signer #4 (33 yrs old male) N/A

All non smokers

More or less keeping the mortgage for 26 months as that's when it matures. Selling house sooner than that a possibility but I still have to deteremine if IRD is within reasonable amount.

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