Real Estate

Life insurance (and I guess home insurance) question ...

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  • Sep 4th, 2015 1:41 pm
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[OP]
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May 6, 2014
95 posts
5 upvotes

Life insurance (and I guess home insurance) question ...

Where is a good place to go for life insurance (in BC)?

Is it cheaper to "bundle" life insurance with home insurance (and I guess auto insurance)?

How much do you pay?

My mortgage broker is urging me to get life insurance along with my new condo purchase (about $44/month - wife doesn't work, no kids yet - Manulife Financial). I was told that there were downsides to "bundling" your life insurance with the bank providing you with the mortgage - but I think this applies to the big banks - because you are stuck with them, and if you leave you lose it all.
4 replies
Deal Expert
Aug 2, 2001
16622 posts
6883 upvotes
I would first look at the source of advice - does the mortgage broker earn a commission from you purchasing life insurance through him? Or is his motivation for suggesting it purely out of concern for you?

Life insurance may or may not be a good idea, it depends on the individual. It certainly should not depend on whether you own a home or not, and while now may be a good time to review it, purchasing property does not necessarily make it a good or bad idea.


When deciding on life insurance you really need to educate yourself on what is being offered and what it covers. There are many, many types out there so if life insurance is something you want to explore it is really something you need to educate yourself on first to decide what risks you are trying to mitigate with the insurance, and how much insurance is required to mitigate those risks.

For example, if you were a single person would it make sense to purchase insurance to pay off your mortgage in the event of death when your heirs are non-dependent family/friends?
[OP]
Newbie
User avatar
May 6, 2014
95 posts
5 upvotes
They earn a commission.

From home buying experiences I have heard from others, it seems mortgage brokers push "life insurance" down your throat. I can see it being important - particularly coverage that relates to you losing your job for some reason or some health issue, in which case insurance would cover some or all of your mortgage payments for a short duration - but most younger people these days do not have life insurance. I guess it's a bit different for younger families.
Deal Expert
Aug 2, 2001
16622 posts
6883 upvotes
flatblack wrote: They earn a commission.

From home buying experiences I have heard from others, it seems mortgage brokers push "life insurance" down your throat. I can see it being important - particularly coverage that relates to you losing your job for some reason or some health issue, in which case insurance would cover some or all of your mortgage payments for a short duration - but most younger people these days do not have life insurance. I guess it's a bit different for younger families.
If your mortgage broker is earning a commission on the product they are selling then they will most likely have an extremely biased point of view on the situation. I would strongly recommend you research yourself and try to find impartial opinions that do not benefit from you purchasing life insurance.

I am not an insurance expert, but it sounds like the product you are talking about is more than just life insurance. It is critical illness, disability, etc. rolled into one offering. Remember to read the fine print very closely, for example on some policies they just delay the payment (many disability policies are like this). As well, with critical illness policies many only cover cancer that is life threatening - they will throw around statistics about how many Canadians get cancer but fail to mention how many Canadians get cancer that would be covered.


Your post indicates you have a wife that does not work, and in my interpretation, a future that includes children. Regardless of whether you choose life insurance (and if you do, what coverage you choose) you need to make sure that you sit down and evaluate the potential risks as the sole income earner and decide what (if anything) you want to do to mitigate it.
Member
Aug 13, 2006
298 posts
33 upvotes
I had the same question when purchasing my home and ended up getting an independent life insurance for the following reasons:

1. The life insurance is tied to the mortgage company. I may change companies somewhere along the way so that's not good...
2. My beneficiary are my parents. They may or may not want to keep the house since they already have one of their own.

I ended up figuring out how much expenses my beneficiary may require if they want to keep the house (mortgage payments+taxes+other fees) and any other additional expenses and came up with an insurance coverage equal to that. The monthly payment ended up being very similar to what the mortgage company is offering.

I went through an insurance brokerage to set this up and I recommend you doing the same if you were as lost as me. You won't have to pay for their service (or commit to buying until you are ready) and they can educate you about the various insurance product out there. I also asked them to comment on the mortgage life insurance to get their thoughts. That should give you a recommendation that is specific to your situation and hopefully help you decide which way to go.

Before committing to buying from them, I made sure to ask a few key questions such as how they are paid and how he will weigh companies that gives him more commission (he told me that some companies do pay more but its incrementally small, not enough for him to be biased).

Hope this helps and good luck.

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